The Benefits of Living a Debt-Free Lifestyle

In this difficult economy there are many benefits of living a debt free lifestyle. Debt can be a source of stress to many families, especially those with an unemployed spouse or partner. Being debt free allows individuals to lead a lifestyle of their choice as opposed to feeling stuck in a situation they are unhappy with. Once you assess your financial situation, there are steps you can take to decrease your debt, start your savings and reap the benefits of a debt free lifestyle.

Decrease Your Debt

Decreasing your debt is important in moving onto having a debt free lifestyle. In decreasing debts, it is necessary to put yourself on a household budget. In creating a budget, take all of your household expenses and monthly bills in one column and put your net income in another column. Having a graph can be helpful in evaluating what bills need to be paid and at what time of month. Knowing when your bills are due helps to calculate what paycheck can pay specific bills. After setting up your budget, you will be able to see what money is left over to make extra payments on your existing debt to pay them off faster.

Budget to pay off high interest cards off first, than you can pay off the remaining cards. Make extra payments to pay them off quickly. It is important to speak with the financial institution to prevent any early payment penalties and ask for credit counseling or debt negotiation if you need more assistance.

Start Your Savings

After establishing your budget, figure out how much money you could can set aside into a savings account for a cushion. The purpose of a cushion is to protect you in the case where something unplanned happens such as a medical emergency, flat tire or a broken household appliance.

This savings cushion is essential in preventing you from using your credit cards and accruing more debt. Think of your credit card as being closed, or hide it in a place you will forget about to decrease the likelihood of use. Putting ten dollars a paycheck into your savings account can start savings. Small sums of money will add up and it is better than making no effort to start saving money.

Once you have paid off your loans or credit cards, take the monthly payment you have been spending and put it into your savings account as if you never had it. This will help your savings to grow so there will be money available in case of an emergency. Lastly, once your savings is established, be sure to only use cash when you need to make a purchase to eliminate the option of getting yourself back into debt.

Benefits of Being Debt Free

After decreasing your debt and starting your savings account, you will be able to start reaping the benefits of being debt free. Without debt, you will be able to experience the freedom of knowing that you have money in an account just in case. There will be a lack of stress knowing that you do not owe money to banks or credit cards and your phone will not be ringing in an effort to have your debts paid. It may become time you can start saving money for your child’s college education or that car you have had your eye on. Having zero debt will allow you to purchase household necessities for you and your family with ease. Lastly, this may afford you the ability to take the job of your dreams even if it pays less than you would like it to. Living debt free is a choice that we all have and can all work to make it a reality, once we have established a plan.

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