How Becoming Debt-Free at 25 Changed My Life

I first learned about using “debt as a tool” in my job at a bank, but there were some major pot holes in my new “road to success.” I used things like credit cards and car loans to “get ahead” and establish my credit. Sounds pretty normal, right? The problem was, I didn’t do anything else. Using debt trumped the importance of saving for emergencies, budgeting my monthly expenses, investing while I was young, and spending less than I made each month. Becoming debt-free was not on my radar. How did things go for me? Well, I spent the first half of my twenties working hard with very little to show for it. I had no budget, no long-term plan, no debt-free plan, almost no savings, and a glowing credit report. I was missing some MAJOR pieces to a healthy financial foundation (basically all of them) and headed for disaster. . . . → Read More: How Becoming Debt-Free at 25 Changed My Life

Becoming Debt Free

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“Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.”

Much has changed since Charles Dickens wrote this, but the principle is still the same. Debt is caused by spending more than you receive.

Debt is a symptom of unbalanced books. Address the root cause rather than the symptom. Balance the books and make sure you are not spending more than you are receiving. This is not a moral judgement, just a statement of economic fact.

Most people with debts are in denial. The first step in becoming debt free is to recognise the problem. Address this and you are already well on your way to becoming debt free.

The next step is to find out exactly how much is coming in, how much is going out, and (most importantly) where it is going. Carry . . . → Read More: Becoming Debt Free