Getting into a spot where you’re in debt can be pretty easy to do, just ask the majority of Americans. If you include secured debt in the figure, close to 80% of Americans are in debt (if not, it’s still around 50%, which is still a large percentage). Getting out of debt, on the other hand, is considerably more difficult. Becoming debt free can be a very difficult journey – but it’s absolutely worth it for the sense of accomplishment you’ll get and the weight being lifted from your shoulders.
And yes, it’s absolutely possible to do. The problem is -staying- debt free. A lot of individuals reward themselves by splurging a bit once they’re debt free, and after a few shopping trips combined with other financial blunders they find themselves right back in debt again. Here’s some things to keep in mind and hopefully keep you on track!
Plan ahead and save up.
If there’s a vacation you want to go on, a new guitar you want to buy, or some great shoes you absolutely need to own – save up for them and purchase them in with cash. You might not get the instant gratification from impulse shopping, but you’ll get the satisfaction of having the item paid off right when you get it. You might even take awhile saving up for it and realize you don’t want it anymore by the time you have enough money, and that isn’t a bad thing!
Cash is king.
Speaking of paying with cash – do this as much as possible. Credit cards aren’t “bad”, but if you know that you use them unwisely, you might want to switch to primarily paying for things in cash. If you have the funds available in, you can certainly make a purchase with a credit card, just as long as you can pay it off immediately. This way, you’ll still be reaping any benefits you can get from using credit while not driving up your debt.
Figure out what you spend too much on.
Most people have things that they can’t have enough of – clothes, video games, shoes, dinners, movies, gadgets, all sorts of things. It’s important to figure out what you personally spend too much on, identify it, and curb it. Once you know what gets you going, it’s easy to spend less on, and even avoid the temptation altogether if you have to. If you can’t immediately think of your trigger, take a look at your bank statement – you should be able to quickly determine where a good chunk of your money is going and cut down on your spending in turn.
Moderation is key.
Like a lot of the enjoyable things in life, it’s important to indulge in moderation when it comes to spending money. Now that you’ve climbed out of the pit of debt, you can breathe a little easier. Give yourself a teensy bit of breathing room and feel free to spend a little bit of money here and there on extras – just make sure you don’t go overboard!
You have more income, so save some of it!
Now that you’re debt free, you’ve probably noticed the extra money you have just laying around each month. That is by no means disposable – you need to save it! Take the money that you used to spend paying off your debt each month and put it aside, at the very least, you should start an emergency savings fun. Bad things can happen, and you don’t want to be pushed back in debt if your car breaks down or if you have to go to the doctor.
Lastly, always keep in mind how terrible being in debt was. You’ll have far less stress in your day to day life if you can minimize debt or keep it away altogether – so make sure to follow these steps and stay ahead financially.