Some sure-fire ways to accomplish and maintain debt-free lives

by | Aug 28, 2022 | Personal Finance

In a sense, all debt is the same: We take now, and we repay later. Nevertheless, because debts can have positive or negative effects, they are typically classified as either good or bad debts. The rule of thumb about debt is to avoid debt if it does not increase your net worth or have future value. If it doesn’t do that and you can’t pay it back, it’s bad debt. When does too much debt become a problem?

Defining unmanageable debt is tricky because the concept is often extended to include both debts that causes financial constraints and debt that is associated with these constraints. Thus, defining problem debt can be circular – debt becomes problem debt when it causes wider problems.

There are several issues to consider with regard to these wider social issues created by overwhelming debt, such as lower standards of living, financial exclusion, difficulty accessing mainstream credit products, harming personal relationships, and mental and physical health problems.

The fact is that many people are accustomed to living in the red, whether it’s because of low-interest-rate mortgages or student loans, or because of high-interest-rate consumer debt. In many cases, living debt-free is a dream that seems far away from reality. It was, however, quite possible.

While living debt-free may seem uncommon, debt-free people aren’t superhumans or special, and they aren’t necessarily wealthy. Their willingness to pay off debt or avoid it altogether is what differentiates them from people who are still in debt.

No matter if you have held debt in the past, you can do your part to avoid it in the future. In spite of the discipline required to remain debt-free, you may find that it is a worthwhile commitment to ensure that no hard-earned money is lost to interest. Here are some sure-fire ways to accomplish and maintain debt-free lives.

  1. Build up your savings

Having a secure financial future and building wealth requires saving money. A good life is made possible by saving money, as it lets you enjoy life without being concerned about the uncertainties of life. You can steer clear of many obstacles and hurdles in life by setting money aside in a systematic manner. Your family will have something to fall back on if something unfortunate happens.

  1. Rent instead of buying

In the traditional and constant debate on the advantages for owning versus renting, supporters for home ownership always say that when you own a home, you’re paying yourself every month and building equity instead of paying someone else. What they overlook is that with the money you save by renting, you could actually be paying yourself a whole lot more in real time. For instance, tenants don’t have to worry about the added costs of repairs, maintenance, amenities, and other property rates and taxes. All those savings could go towards living a much better quality of life.

  1. Pay more than the minimum on your credit cards

Repaying the lowest possible amount, you can on your account just to maintain good standing with the credit provider is nice, but interest never sleeps. It’s forever increasing and paying only the minimum will keep you locked in debt for the maximum amount of time. It is best to endeavour to pay any amount more than the monthly minimum, doing this will help you not only lower the long-term costs of your debt but also move closer to living debt free.

  1. Buy a second-hand car

It is no secret that the value of any given car starts depreciating from the time it leaves the garage. So, why choose to be indebted for an unnecessarily long time paying off something that literally losing value by the kilometre. Buying a cheap pre-owned car is one of the best ways to stay out of debt. The insurance rates are lower and used cars are also sometimes less affected by depreciation than new cars. Also, factory warranties are getting longer for those looking to buy pre-owned cars, so that is no longer a concern.

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