Living A Debt Free Life
Living without debt doesn’t have to be a fantasy. If you have the willpower and discipline to follow a plan, you can make it a reality. While getting out of debt is a commitment you will have to make, the following six steps are a guide to help you get started on your way to living debt free.
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1. Start Your Budget
Gather all your current bills and write down how much you pay each month. Be sure to include your mortgage payments, utilities, car payments, and anything else you pay on a monthly basis.
2. Assess Your Voluntary Expenditures
Dine out often? Go into Wal-Mart for two items and leave with two carts full of stuff? If it seems like you, write down how much you typically spend and aim for an honest monthly estimate.
3. Track Your Expenditures
Keep a list of everything you purchase for a month. Make sure to have specific categories, such as Clothing, Music, Dining, Entertainment, etc. While it may be a horrifying reality check, it is one you must make if you want to be debt free. Besides, you’ll probably learn some interesting facts, like the two pizzas you grab on Friday adds up to three hundred dollars a year!
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4. Tackle Your Tax Situation
Once you determine your monthly expenses, you should calculate your net income after taxes. It may be helpful to make two budgets for the two different pay periods in the month, so that you can spread your bill paying out between the two paychecks.
5. Cut Your Expenses
What can you eliminate from your budget? Pizza isn’t healthy anyways—give it up and put the cash toward eliminating your credit card debt. And rather than pay top dollar to go to the movie theaters, check out your local library for free movies and books. Be creative when looking for other ways to save your hard earned cash.
6. Don’t Stray From Your Budget
There’s no point to any of this, if you don’t stick to your plan. Promise yourself that you will follow your budget and not overspend in any given category. If you find it hard, try using envelopes filled with the allotted cash for each category. Not only will it be easier to keep track, but you also won’t find yourself constantly withdrawing cash from your bank.
While you may feel a bit discouraged by the budget, living without a financial plan will only make you feel worse in the long run. By planning and making a commitment to stick to your budget, you can enjoy the relief in knowing you’re financially free.
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