How can I become debt free ?

If you were to thrown a stone towards a group of people on the street, chances are you will hit someone who is experiencing some sort of debt at the moment. But don’t do that. It’s just an illustration of how debts have become part and parcel of many people’s lives. Is it really a dead end where debts are concerned? Many people out there are at their wits end trying to figure a way out of their financial misery. Is being debt-free an illusion and something which cannot be achieved? Well, you should read on and chances are, you will find some practical tips here to help you stay out of debts or start you on your way to becoming debt free.

Live Within Your Means.
That is so true, isn’t it? How many times have parents told their children or elders advising the young to live within their means? Unfortunately, many try to keep up with the Joneses and spend above their means with credit cards being the chief culprit. Keep track of your expenses and make sure it is not more than your income. Create a budget and live within it.

Save Not Just For The Rainy Day
Some say “I am saving for the rainy day”. But I say “Why just save for the rainy day?”. Start saving today. Take at least 10% of your income and stash it away in good investments like fixed deposits (which guarantee income albeit not much), unit trusts (which may or may not generate income depending on the risks involved) or even stocks and shares. Save them for the long haul especially for your retirement and keep in mind the inflation rate as your $100 today is unlikely to go far in 10, 20 or even 30 years’ time.

Money Management Is The Key
You don’t have to be a qualified accountant to become a good manager of your money. The key to money management is discipline. You can be a qualified accountant but if you are not disciplined enough with your monies, you will still find yourself spending more than necessary and incurring unnecessary debts. Set your short, medium and long term financial goals and determine how you want to achieve these goals. Does it mean saving more each month? Spending less on entertainment? Allocating more to investments? Whatever you plan, make sure you are disciplined enough to stick with it with no deviation.

Plastics Are Environmentally and Can Be Financially Harmful
Credit cards. The plastics you don’t leave home without. It can be a good friend but it can also be a devil if you fail to exercise prudence with your spending. Do you know how much money you have at hand before you decide to swipe that credit card of yours for your latest purchase? Do you actually need so many credit cards? Make it a habit to pay your credit card expenses in full whenever they are due. Make it your goal never to allow your credit card issuer to earn interests from you. I promise you it gives you immense satisfaction to find that you are being given a credit card with good facilities for free when you pay your card in full every month and the credit card issuer gets nothing out from you in interest charges.

Do you find the above tips common? I don’t fault you if you do but those tips have long been recognised as ways to deal with the most common of debt incurring reasons. They are obvious but not many people follow these time tested methods to stay debt-free. Are you already following them or will you be?

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