Debt can be crippling to a family, and it’s never easy to get out of the hole. But there are options to help you climb your way up. You can take control of your finances and put yourself on the path towards debt-free living with these 5 tips for how to achieve a frugal debt-free life.
How To Achieve A Debt Free Life
Want to achieve a debt free life? Follow the suggestions below!
1) Track Your Spending
You may not realize how much money you’re spending until you start tracking it. Once you start paying attention, you’ll be able to see where your money is going and make adjustments accordingly.
Start by creating a spreadsheet where you list your income and expenses. This should include every expense, from the smallest to largest – even if it’s just a few dollars here or there. Be sure to keep track of how much money you have left over after paying bills each month as well.
Figure out what expenses will need to remain consistent each month (i.e., rent or mortgage payment, car payments). Then set aside funds for monthly bills such as utilities and groceries so that they don’t sneak up on you. Make sure to account for variable costs as well, such as gas and medical expenses.
Once you have a better idea of where your money is going each month, look at ways to trim the fat from your budget. If certain things aren’t necessary such as cable TV or eating out, cut them immediately!
3) Use Your Credit Cards Responsibly/Eradicate Debt
Although it may be tempting to only use a credit card when you need something, this can get out of hand quickly. If you must keep a credit card on file, make sure that your limit is such that you won’t go beyond it. Also, ensure you pay off your balance in full each month.
If possible, set up an automatic payment from your checking account so there will never be any late fees or interest charges again. Credit cards are not free money: they’re borrowing money at high rates of interest and should be used sparingly and with caution.
Pay cash for anything you can whenever possible. Rather than going for instant gratification, save up for expensive items when possible so you can pay for them outright, as opposed to paying even more for them when interest charges are figured in.
Look for ways to pay off the debt you currently have. There are a number of different strategies, so-called “ultimate debt solutions” you can take. Find one you can live with and implement it.
Getting caught off-guard with a large unexpected expense is one of the ways people accrue credit card debt. Building up an emergency fund of three to six months of living expenses (including rent/mortgage payments) stands you in good stead should such an event occur. You’ll be able to manage it with cash, instead of going farther into debt.
5) Find Ways to Make More Money
If you’re stuck in a job that doesn’t pay well, don’t be afraid to look for other opportunities. Perhaps there’s another position with your company that might offer better benefits or more room for growth. Or maybe it’s time to start looking into other companies altogether and apply to jobs outside of your current industry.
Even if the only thing you can do is continue working at your current place of employment, ask yourself: “What could I do here beyond what my role entails today?” Could you take on additional responsibilities? Volunteer for projects and committees? If so, explore these options and see how they impact where you are financially down the road to get you to your goal of how to live a debt free life.
AUTHOR Kimberly Studdard
Kim Studdard is a project manager for online entrepreneurs and small businesses. When she isn't spending time with her daughter and husband, or reading her growing pile of horror books, you'll find her working on her HR degree and working towards FIRE.