Getting out of debt and staying out of debt is an essential principle to becoming wealthy. Getting out of debt is one thing, staying out of debt in another. After you pay off that last bill, you should try to stay on the budget and lifestyle you were maintaining while paying off your debt. That extra money can now go to savings. These 10 steps will help you get and stay out of debt.
1. Don’t Spend More Than You Earn.
You can never maintain a debt free lifestyle if you spend more than you earn. If we examine why and how people fall into debt, we will find that this is the root problem. People spend more than they earn. While this all sounds like common sense, many people don’t practice it.
2. Wait For A Sale
When you buy on sale, you practice two things: patience and thriftiness. When it comes to fashion and gadgets, this rule is a must to follow. It’s easier than ever to do so now: you can download an app that lets you scan barcodes to see if the item is cheaper anywhere else nearby. Or you can wait for month end or holidays when things re on special.
3. Create A Written Budget.
You need to know where your money is going, and you need to have a sense of control with your money. Monitor your spending for two months by keeping a log and collecting receipts. Then segment your spending into expense categories such as entertainment and food. Once you have that information, you combine it with your monthly bills to get a clear picture of your monthly spending habits.
4. Have Alternative Sources Of Income.
There are endless possibilities of ways to make extra income right out of the comfort of your own home. Is it practical to lower your monthly food budget or put off paying credit card accounts to try and apply that money to other things? No. If you find yourself falling short on your budget each month, then the practical approach is to take on an extra part-time job, pay your bills down and then get your finances under control.
5. Save A Big Emergency Fund.
Once you are out of debt, you need to make sure that you stay out of debt. Putting together a large emergency fund that will cover your expenses up to 3 to 6 months will save you financial crisis. Once you change your behavior to get out of debt, you must keep doing those things to stay out of debt.
6. Save Rather Than Spend.
One of the ways that retailers convince people to make large purchases is to entice consumers with low monthly payments on financing. Saving money for purchases is always preferable to opening a finance account for the practical consumer. You may have to wait a few extra months for the item but, if the item is not a critical need, then saving for it will allow you to have the things you want without putting yourself into debt.
7. Do It Yourself.
Spend time learning how to do tasks that you would normally pay a contractor or professional to do. For example, you can save some money each year by changing your own oil and taking the old oil to a local auto mechanic for disposal. If you have an interest in home remodeling, then start researching ways to do projects on your own rather than paying extra for a contractor to do them.
8. Take Care Of Yourself.
A quick way for you to fall into debt is by not taking care of your health. One hospitalization can ruin everything that you’ve worked so hard for. Eat a health diet, exercise and take some time to relax every so often. Go to the doctor for a yearly check-up to ask questions and make sure you’re not missing something.
9. Avoid Debt Settlement Organizations.
Debt settlement companies work directly with creditors to negotiate attractive terms or charge offs. It sounds good in theory, but there are several disadvantages. Expensive fees, creditors who can be reluctant to deal with a settlement company and advice like no longer paying your debts can result in heavy penalties and make a bad situation worse. It’s best to call creditors on your own and negotiate.
10. Once Out, Stay Out.
Remaining debt-free and managing debt wisely is ongoing. Keep a diary to document challenges and accomplishments. If you feel the need to take on debt again, read through and relive those times you went through to achieve freedom from debt, today.