How To: Live Debt Free

atmackenzie

Jul 28, 2008

Finance

Do you dream of being out of debt but it seems it will never happen and it's too far out of reach? Millions of people feel that way, but there are ways to get out of debt and be free. Here are some tips.

First things first, you have to figure out why you're in debt. Do you spend money on things you can't afford? Did you take on too much at once and now you're in over your head? What are you spending money on that isn't necessary and is out of your means? How much do you owe and who do you owe that money to? These are the things that you have to be honest with yourself about before you can take action, and you have to admit that you are in a financial pickle. Once you figure out what you are using the extra money for, you can control it, and use that money to pay more on your debts instead. Imagine what you could do with all the extra money AFTER your debts are paid!

The number one thing you need to avoid is not adding to your debt. Cut costs or unnecessary things out and cut up the credit cards. Instead, start putting away small amounts of money for emergencies, and soon it will add up. To get out of debt, you must live within your means.

Things you "need" not "want" can usually be bought secondhand. Check garage sales, newspaper ads and thrift stores for clothes or other goods. Forget about paying retail prices if you can find just what you need at a big discount. Cook meals at home or take your lunch to work instead of eating out, and either finish leftovers or freeze them instead of throwing it out and wasting it. Food is getting harder to come by and is getting to be a lot more expensive.

Are you a shopaholic and that's where your money goes? Try to find a hobby to take up some of your time instead of going shopping. Borrow magazines, books and DVD's from your local library instead of renting or buying them. If you are a coffee drinker, make a pot at home and take extra in a thermos instead of paying $5 at Starbucks every day. If you are able, take public transportation or carpool with others to work. That not only cuts down on emissions, but also saves you a ton of money that you would spend on gas. Take that extra money and pay extra on one of your debts.

When trying to get out of debt, remember that keeping up with the Jones' isn't something that will bring you happiness. Don't compare yourself to others and try to buy what everyone else has. One thing to tell yourself is to live like no one else would now so that later you can live like no one else would. Your friends may have it all, but when they get deep in debt, you'll be free of debt and will be able to get what you want. To get out of debt, you have to worry about yourself and your family; not the luxuries and things you don't really need.

Next, in addition to trying to pay extra on debts, you can work on one at a time. Pay your debts on time each month, and take a small one to pay even more on, and one at a time, get something paid off completely.

Finally, keep a little play money. If paying down the debt just becomes a routine chore, you'll be more prone to start spending again. Set aside a small amount of money to use for spluring on something for yourself occasionally. You'll feel much better about paying off your debts but still being able to get a little something now and then and buying something you can afford.

Following these tips can help you get out of debt sooner, and once your debt burden is lifted, you will feel much better about yourself, your finances and your future.

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