10 steps to living debt free
The Hildebrands in 2009 were $100,000 in debt but they decided they didn’t want to declare bankruptcy, they wanted to pay their debt off. In an interview with WISN12 NEWS some of the things they did to reduce their expenses included:
1. Going to thrift stores
2. Doing their own auto repairs
3. Home haircuts for the family
4. No luxury items like CDs or DVDS
5. Stretching their shopping budget by having meatless dishes, generic vs. brand name foods and stretching the dinner leftovers.
The husband took a second job as a janitor to increase their income and he would save on gas money by sleeping in the car between the two jobs.
After four and a half years, they managed to pay off the debt and buy a house. As they shared their day at dinnertime around the table, “what was on the table wasn’t as important as what took place while we were here”.
So, there were benefits too from having a life where there wasn’t money to go out to restaurants or after-school activities for the children and more time for sharing around the dinner table.
Steps to Live a Debt Free life
1. Consolidate your debt and create a debt repayment plan
In order for you to live debt free, first you have to look at your debt and create a debt reduction plan to pay it off either by creating your own budget or seeing a Credit Counsellor who can help with a plan for debt repayment.
2. Create a lifestyle budget
Have a look at the income coming in and fixed expenses like a mortgage or health insurance or variable expenses like food and entertainment that are going out of the household.
3. Develop a Debt Free Mindset
There are 10 habits to Debt Free People
1. They have attention to detail
2. They know their stuff
3. They pretend they make less
4. They think long term
5. They aren’t afraid to ask
6. They save
7. They set goals
8. They say no
9. They know the value of cash
10. They value experience over stuff
4. Cash Only Lifestyle
Never spend your money before you have it. –Thomas Jefferson
If you don’t have a credit card, you can’t create debt so always pay with cash.
4. Track your Expenses
So, if you have the knowledge about budgeting and saving, you can change the bad spending habits of a lifetime. So you should become knowledgeable about money and track it with either a budget book writing down your expenses and deducting from your budget or using money software to track each expense.
5. Develop a Debt-Free Mind
Always when out in a store or you have an urge to buy on the internet, ask yourself do I really need that?
6. Develop Free Experiences for the Family
Go for experiences rather than stuff by looking at going to the park together or sharing a family meal or watching a T.V. show together with popcorn instead of going to the movies.
7. Set Long-term goals for your year
Instead of impulses like going on holiday when you get the urge, if you site down and plan your year out at the beginning of the year with family activities, holidays and major expenses like house insurance all listed for the year, you can start savings for those expenses at the beginning of the year.
8. Set Long term goals for your Life
As your debt reduction plan reduces your debt and you have more income in the budget, you can start planning for your long term goals for your life whether it be the children’s college fund or your retirement.
9. Rainy Day Expense
A step that most folks forget is planning for that “Rainy Day” when someone falls ill and less income is coming in the house or medical expenses have increased, so include a “Rainy Day” fund in your budget as your debt is reduced.
10. Develop a Saving Mindset
Now that you debt is becoming manageable, don’t start spending instead increase the savings that you can put aside for your retirement or “rainy day” expense. So make your debt reduce at a steady pace while your savings grow.
Hopefully, if you do these 10 steps, your debt will be gone as well as the stress of having a debt burden. Is there any other suggestions you have for moving towards a debt-free lifestyle?