While it may seem that living debt-free is a lofty goal that is nearly impossible to accomplish, in truth, with some discipline and dedication to the task, you too can go through life without being financially beholden to anyone. Regardless of your past financial indiscretions, if debt-free is the way you want to be, you can make this dream a reality through the making of modifications to your spending practices and engaging in more careful financial planning.
List your current debts, and pay them off. Unless you both have always been master debt-avoiders, you have likely accrued some debt during your early adult years. Before you can begin your debt-free life style, you must tend to these pre-existing financial obligations. Sit down with your partner and create a list of all the money that you owe between the two of you. Pay as much as possible towards these debts each month to eliminate them as rapidly as you can.
Buy a fixer-upper. Many people take on a large debt-burden when they buy their dream home. Instead of purchasing a residence that is a financial stretch, select an inexpensive property that needs some work. Purchase this less-expensive abode with cash, if possible or, if not, take out a mortgage and make double and triple payments each month to pay it off well before the end of the loan term. Gradually make modifications to the house, fixing up one space at a time yourself or with the help of a professional, and paying for these home improvements in cash rather than on credit.
Increase your income. If your income is insufficient to support the lifestyle you desire, consider getting a second job. Even through you don't want to dedicate more time to work, doing so may help you achieve debt-free status more quickly, and without cutting out as many of the luxuries that you currently enjoy. Picking up a side job is an especially wise choice if you are newly married and have yet to have children, as you likely have more time and a healthy amount of youthful energy to devote to bringing in some extra cash.
Create, and stick to, a budget. Prepare a household budget using a spreadsheet program or, if you are not technologically inclined, a good old pad of paper and pencil. List your necessary expenses each month, including unavoidables such as utility bills, food costs and rent. Subtract the total of these monthly expenses from your income to see how much money you have left to play with each month before spending a dime on luxuries. Complete this money management task at the start of each month to ensure that you never find yourself wanting for cash, and tempted to turn to credit, come month's end.
Keep, but don't use, a credit card. One of the hallmarks of debt-free living is not relying on your trusty credit card; however, this does not mean that you should pitch your plastic. Instead, tuck a card away in a kitchen cabinet or desk drawer. Pull this card out only in emergency situations. If you do turn to your last resort credit card, plan paying the card off in your next month's budget to ensure that you don't allow the balance to carry.
Set up an envelope system. If making a list of dollar figures that you plan to spend isn't real-life enough for you, use the envelope system. At the beginning of the month, take the cash you plan to spend out of your account and divide it between envelopes. Label each envelope with the good or service that you intend to spend the money on. For example, make an envelope labeled “Entertainment” and slip $50 into it at the start of the month. Once the envelope is empty, you have spent all you can on that type of expenditure for that month.
- The envelope system is also highly effective for holiday shopping planning, as you can tuck away an envelope and slip $10 or $20 in it each month to ensure that you have a sizable chunk of change come the holiday shopping season, and that you don't allow these festivities to put you into debt.
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