For many, living a debt free life can feel like a goal that is way out of reach. Financial freedom and thriving in life (not just surviving with a cloud of debt) is not something that people dream about these days because it feels like the impossible.
Not all debt is bad, of course. Debts due to student finance or a mortgage are often the ‘good’ debts to have. The thing is, debt in itself is never something anyone wants to live under for too long, and it makes sense as to why. Debt can put pressure on people, on families, but it doesn’t have to be that way forever. Voices such as Alex Kleyner stand out as positive because they talk about the approach to becoming debt-free, but there are things to do to stay that way and that’s on you to manage. Let’s take a look at some strategies to ensure that you live a debt-free life.
- Define it. What does debt-free look like for you? Do you mean any credit cards or eliminating payday loans and high-interest debts but keeping the mortgage on your student finances? Because that’s what debt-free looks like to most people. If you want to be truly debt-free, then you’re going to have to come up with a strategy to make sure that you pay off your student finance and your mortgage in the same way that you would your other debts. You can do this with the snowball method, as long as you understand how to be debt-free in a positive way, you’re going to feel like you’ve got control over your finances and your life.
- Get to know how much debt you really have. Before you can figure out how to live debt-free, you need to know how much debt you have so that you can pay it off. This will help you to understand your debt-to-income ratio so that you can weigh your options for how you can tackle it the best.
- Start snowballing it. There are so many different payout methods when it comes to debt, but snowballing is the one thing you can do that is really going to make a difference. This is the method that allows you to prioritize paying off the lowest balance. First, You pay the minimum on all the other accounts and once you get rid of the lowest balance, you add the amount you were paying to the minimum payment on the next highest debt amount. This, as you roll it, will grow like a snowball.
Figure out your budget and make it work for you. Getting into the habit of tracking your money is a great financial move. Finding a budgeting system that works for you can really help you to maintain a debt-free life. You could try the zero based budgeting or the 50/30/20 method or even the envelope system. No matter which one you decide to use you do, you need to stick to it.
