Debt Free Living: Find The Real Secret To Debt Freedom
What Is Debt Free Living?
Debt Free Living
If you are seeking debt freedom and you’re looking at debt free living as a way of life, what are you really looking for?
Let’s take a look at the many definitions of debt free living.
Definitions Of Debt Free Living
The Strict Conservative View
In the most conservative restrictive sense debt free living is going through life with no debt at all. That means that you owe no one anything, no car loans, no mortgage loans, nothing. You only spend what you take in for income.
A More Liberal View
The more liberal view of debt free living means that you would have some debt for those large items that it’s hard to acquire without taking on some debt. In this view it’s okay to have a car loan or a mortgage on your house. But you wouldn’t take on any credit card debt in order to buy things you ordinarily use.
The Most Liberal Debt Free Living
In this view you would have a car loan, mortgage loan and some credit cards to handle things like internet purchases. But you wouldn’t carry any balances from month to month. You would make sure before you charged anything that you could pay it off right away.
Debt Free Living Is A State Of Mind
Whichever definition of debt free living you choose to live by, it really is a state of mind. It’s basically how you approach and think of debt that counts. If you see debt as something that overpowers you and keeps you down, then you can’t achieve debt free living. You’ll be stuck in debt no matter what.
But if you see debt as a means to an end that can help you achieve what you’re looking for in a life style without overwhelming you, then you can reach debt freedom. Then for you debt could be your friend as long as you don’t over do it. In this mindset you could have a balance on a credit card that would carry over to the next month without feeling you are breaking the rules.
Debt Free Living With Bills
If you think about it for a bit even when you are adhering to the most strict definition of debt free living you are not entirely without debt. Just think about your electric bill or your gas bill, or even your city water and sewer bill. Most of these bills are for services already rendered. That means that you really are in debt to the service company for receipt of the services until you pay them. So it’s almost impossible to live according to the strict definition of debt free living.
Debt Free Living With Good Debt
For most people the most affective debt free living is having a mindset the embraces the most liberal of the definitions. That way they are freed from the hassles of debt without feeling they are cramped by excessive rules.
Using this most liberal definition, having certain debt can be good. This kind of debt is good debt. Mortgage loans and car loans would fall into this category. These are normal living debts that most people can handle within reason. In addition, these kinds of debt serve to build up a good credit report which is essential in today’s economic climate.
How To Achieve Debt Free Living
With all this knowledge how do you achieve debt free living? How can you get from a current status of deeply in debt to debt freedom? The secret lies in taking the right actions.
Debt Freedom Actions
Taking the right actions to get from deeply in debt to debt freedom means that you look at each action you take to spend money. Ask yourself “does this action get me further behind in my debt or does it help to get me out of debt?”
The only way outside of bankruptcy to get out of debt is to bring your income into balance with your outgo. There are only two ways to do that. You can increase income or decrease expenses or a combination of both. So each action must be designed to do one of these two things.
Simple Actions You Can Take
Here is a list of simple actions that you could take to get you started on the road to debt freedom.
- Have A BudgetMake a list of all your expenses and income sources. Then see how your current expenditures match your current income. What could you cut out or what other income could you generate to make them equal each other on a monthly basis? Then track how you are doing each month to keep yourself on target to meet your budget. This is what good businesses do.
- Mortgage LoansIf your mortgage payments are too high for your current income, consider options to reduce them. There are many programs available to assist you in doing this. In addition you might consider where else you could live to cut your monthly payments. Maybe renting for a while might be what would bring things back into balance.
- Automobile LoansDo you need a new car right now, or could you keep the one you have running? Maybe purchasing a used car might be more economical than getting a new one. Maybe making needed repairs would keep your current car running for many years longer.
- Credit Card UseOnly use credit cards to make purchases that you couldn’t pay for with cash or a check because the vender wouldn’t accept it. Pay down balances that are too high especially on cards that have a high interest rate. In addition think about calling your credit card company to reduce your interest rate or make arrangements to settle accounts you no longer need or want. You might be surprised what you can get them to do for you.
- Establish A Reserve FundFind a way in your budget to put aside something each month, even if it’s only a few dollars. The important thing is to create the fund and to continually put money into it on a regular basis. This builds confidence and also gives you a cushion for unexpected events that occasionally happen.
Change Your Mind
Most important of all, the thing that will move you along the quickest to get from being overwhelmed by debt to debt freedom is to change your mindset. This is the real secret to getting out of debt. Change the way that you view your circumstances and your debt. Focus on debt freedom and debt free living rather than on the mountain of bills that arrive each month.
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