4 Ways to Lead a Debt-Free Life

Retiring without debt, and living free of that burden, is a dream for many of us. So what would it take to make that dream a reality?

A conscious budget. Most of us have some basic framework of a budget, but we don’t really designate a certain amount of money to each expense and then stick with it.

For some people, using an app to track every dollar can be helpful. Others need to set aside a small amount of cash for discretionary spending, so that they don’t feel overly tied down. It’s still budgeting, but the mental trick helps you to feel more “free”.

After budgeting for expenses, the rest should be diverted to retirement savings and savings for other goals.

Eliminate impulse purchases. Make a list of needs before heading out to shop, and only buy items on the list. You might find it helpful to carry cash instead of a card (and only as much cash as you need). With large purchases, institute a 24 to 48 hour waiting period to think it over. And don’t forget to reward yourself occasionally; true austerity isn’t fun, and most people wouldn’t stick with it for long. There’s no need to make yourself miserable.

Look for savings. Compare insurance rates regularly to locate better deals, negotiate with phone and internet service providers, and shop around for the best prices on anything you purchase (especially larger purchases or regular subscriptions). The point is to reduce regular expenses as much as possible.

Establish an emergency fund. The key to living debt-free is to establish an emergency fund so that you never need to borrow for an unexpected expense.

So, which is more important, savings or paying down debt? Ideally, you should tackle both goals at once. Let’s schedule a time to discuss your long-term financial plan, and we can help you decide how much you should be stashing in savings, setting aside for retirement, and paying toward your debts. Hopefully we can help you retire free of debt, if that is your goal.