Ask any person if they have a list of what they want to achieve in life and there is a big chance that one of those is being debt free. Especially so that NewYorkFed.org shares that in the first quarter of 2015, the credit card debt is still at $0.68 trillion. Considering that this just forms part of the most common household debt list, a lot of American consumers are still in the red.
There are lot of tips to becoming debt free but not everyone is able to follow through with a strong determination their plans of riding their budget of debt. Some just starts off for a first few weeks but decides that nothing is happening. While others looks at what they need to do and are immediately intimidated and never get started.
But if you keep at it, you will find that the journey is very rewarding when you see your balances dwindling down, you will slowly feel how all the months or years of hard work is finally paying off. Those months that you had to cut down your expenses and when you had to pass up that very enticing deal in the mall just so you can pay off your debts.
But as soon as you are debt free, how do you maintain that situation and keep debts away? Just like when you have successfully shredded all those fat from years of pizza and beer and now you are at a crossroad on what to do. You want to maintain your present situation and unsure how to move forward.
Staying away from debt
The same can be said with your finances as soon as you reach your goal – how do you stay there? How do you prevent the same debts from recurring and having to start the whole repayment process all over again. Here is a list of characteristics on how debt-free people deal with their finances.
- Learn the value of waiting. Most people who are able to remain debt free knows the value of waiting when it comes to their purchases. But this patience is the product of forward planning and knowing what they need beforehand. This allows them to be on the lookout for deals on the items that they want so they can get them at a discount. Their patience translates to savings on their accounts because they are take their time and do not buy on impulse.
- Keep your ego in check. If you see your officemate using the latest smartphone or your neighbors pulling up on their driveway with the latest car model, you need to keep your ego in check and prevent purchasing those items only because you want to compete with other people. You need to have a clear understanding of how hard your journey has been and not squander off the opportunity by committing mistakes and ending up where you started.
- Use cash in paying for purchases. Creditcards.com shares that the average balance per consumer when it comes to their credit cards it at $8,200. That is a lot of debt form using credit cards and once you have paid them off it is very hard to stay debt free with your credit cards. One thing you might want to look into is to use cash as a form of payment. Using cash will make you think twice because you can see and feel the money going out of your hands. In contrast with credit cards, you just swipe and sign without ever seeing the money.
- Negotiation is in their genes. People who are able to stay away from debt is not ashamed of negotiating the cost and so should you. See if the lenders would agree to better terms or when you are buying things for the house, look for great bargains and discounts when out and about but never forget to ask if you can get discounts on the items especially if it is a bit pricey or if you are getting a lot of pieces. See if the store owner would agree to a small discount because that can mean a lot for your savings.
- Great credit score leads to low rate. There is a big chance that if you have been paying your bills on time, your credit score would have gone up. The last thing that you need is to ruin your credit score because this will limit the benefits you can get from lenders. Improvement on your score can come from being responsible in using your credit and being aware of debt-to-income ratios among other things. Low interest rates is one of the advantages consumers with high credit scores get from their lenders. They get this because they are not seen as risks for lenders. A low interest rate for loans like mortgage or an auto loan can mean significant savings down the line.
- They stay away from low monthly payments. If it is the result of a low interest rate then there is no problem but if they are not too keen on making small payments with interest accruing over time. There are those agree to it because they would rather pay small every month than totally miss their monthly payment. But if you can afford to make the bigger payment and save interest then you should go ahead because that savings can impact on how you are able to properly allocate your funds in the future.
One plus factor of people who are able to remain debt free is that they get better sleep at night. This is because they know that no one has lien on their hard work and that no one will be calling them tomorrow trying to collect on an outstanding debt or a bank trying to tow away their car for repossession.
Can you save with automation?
One of the most effective ways of staying out of debt is to make sure that you have funds over and above your needs. Of course that is without saying that you need to manage the money better but having more that what you need is means you can invest your money for future use. Here are a few automation ideas that you can implement in your life to help you save.
- Sticking to a dress code. This might be hard to believe but Businessinsider.com shares how Facebook CEO Mark Zuckerberg wears the same identical gray t-shirts because he mentioned that choosing what to wear every morning can take out energy away from his work. Of course you do not have to do the same thing but preparing your clothes in advance can also help take away some stress in the morning
- Bring your meal preparation to the next level. Apart from looking at tips in buying groceries, you can bring that to the next level and plan your meals in advance as well. This can help you save time from thinking what to cook to preparation as well as money from eating out. You can also look at subscribing to house essentials like toilet paper, dog food, shampoo or even dryer sheets. These are regular household items that you regularly need and having them automatically purchased and delivered to your house can save you the hassle of making quick and unscheduled trips to the grocery
Being debt free is a great place to be in but it is also important to know how you can stay away from debt. This prevents having to repeat the challenging process of paying down loans and clawing your way out of debt again.