From credit card payments to mortgages and car loans, it looks as if debt has become a normal part of life for many of us. On average, consumers pay up to $1,154 per month on outstanding credit card debt alone. Now imagine if all of that cash could be put towards other, more profitable ventures.
Alongside this, living with suffocating amounts of debt can be extremely detrimental to one’s health. Whether it’s elevated levels of chronic stress or the lack of financial freedom, there are plenty of reasons why you should consider living a debt-free life.
Having written extensively about financial management, we now take a look at how just about anyone can lead a debt-free life.
1. Switch over to cash
Credit cards can be a godsend for those times when you need access to a source of readily available cash. While most definitely convenient, credit cards however should not be a solution to your cash flow problems. Instead, your credit card should be used only in the event of an emergency.
Unfortunately, most folks make the mistake of using their credit cards for all kinds of purchases. This lack of discipline causes an overextension of one’s expenses whilst encouraging you to live beyond your means. On the long-term, you’ll end up in a vicious cycle of constant debt repayment.
Thus, instead of accumulating debt and getting crippled by extortionate interest repayments, you’re better of switching to cash instead. Not only do cash payments prevent you from putting a dent in the plastic, but it also encourages more prudent spending habits.
2. Start clearing off your debts
If you didn’t already know, banks live off the interest payments from your credit card, mortgage and loan. Naturally, it would be in their best interests to keep you paying for as long as possible. Hence if you’ve got outstanding loans of any kind, it’s best that you pay them off as quickly as possible.
Many of us are guilty of accumulating large amounts of credit card debt while paying only the minimum amount. This ensures that your debt is stretched out for a longer period of time which incurs additional interest payments on your end.
Instead of making the bankers rich, you should consider consolidating your debt into a single lump sum for easier repayments. While it may be difficult at first, with time, you’ll begin to realize that a burden has been lifted off your shoulders as the amount owed shrinks.
3. Audit your expenses
Netflix. Internet. Amazon Prime. Online shopping.
These aren’t just a random collection of words, they represent some of the most common household expenses. More often than not, one is able to live without most of these luxuries.
Paying through the nose every month on your internet bill? Why not switch over to another service provider or opt for another package. If you’re the only one using the internet, chances are you can live without a 100mbps connection.
Performing a monthly audit of your expenses is a great way of identifying any forms of unneeded spending. Take streaming services for example, between Hulu, Netflix, Amazon and YouTube (which is totally free) chances are you can’t watch every single one of them. Instead, look for the least used streaming service and terminate your monthly subscription.
All of the extra dollars you’ve saved can be put into an investment fund or kept aside for a rainy day.
4. Build alternative sources of income
In this day and age, it’s hardly possible for anyone to live on a single source of income alone. Fortunately, thanks to the internet, nowadays just about anyone can find a side hustle to earn some extra cash.
Whether it’s freelance work or trading stocks and foreign currency online, there are plenty of opportunities for the entrepreneur. If you know sports, you can also wage responsibly on the best basketball picks in BetAmerica. The extra cash you’ll earn can be used to help pay the bills or to build up your investment portfolio.
Choosing to live a debt-free life has more than its fair share of rewards. Through a combination of discipline and consistency, just about anyone can achieve this freedom.