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Dealing with debt can be the bane of your existence, for real!
It can deprive you of every joy and fun thing you want to do in your life. Why? Because well, you are always stressed out thinking about clearing bills.
But the good news is, the same debt can be wiped out from your personal finances!
All you need to practice is:
A few money-related habits that ensure your credit score and monthly expenses stay on track!
Want to know more about these debt-free habits and enjoy the freedom of swiping your credit card freely? Let’s dig in!
1. Starting With A Right Financial Baseline
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The way you start a specific project, how you look at it, the type of changes you make to it along the way, and everything in between determines your final success!
The same goes for when you want to enjoy a debt-free lifestyle.
Therefore, before you start taking tough and mountain-like steps to overcome the financial stress caused by overwhelming debt, ask yourself why you need to be debt-free. What is it that you want to achieve in your life?
Here are some simple questions:
- Would you like to use any other credit card with a high-interest rate or a secured credit card with the lowest interest charges?
- What kind of relationship do you have with your money?
- Is your money controlling you or are you ready to control it?
- Do you want to enjoy a stress-free retirement?
- Do you wish to enjoy the fruit of investment?
And a few more that you deem fit related to your financial standing. These questions will help you fix your financial perspective and clear your mind whether
- Is it your short-term impulsive shopping that matters the most?
- Or, is it freeing yourself from debt and then enjoying yourself the way you want that matters?
On the other hand, not doing so will definitely lead you to a confusing financial state and not-so-desirable results at the end of the day.
2. Keeping Budget Flexible
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Yes, there are different methods like the 50-30-20 rule to control overspending and saving on a monthly basis.
And there’s no denying the fact that such methods work like magic for some.
However, what about the rest of the others?
Many people often come up with complaints that they tried so hard to stick to their monthly budget but at the end of the day, ended up messing up their own budget.
So, what is the way out?
The simple solution is to keep their tough budget as flexible as possible!
Strange, right?
The main reason behind this is that,
- Yes, life happens and sometimes you are left with zero options but to spend
- Once the transaction is made, you are followed by a “stepping over your budget” guilt
- This results in disturbing your strict financial planning for the month.
Therefore,
- Learn to balance your budget
- Try flexible options like zero-based budgeting
- Such options allow room for spending while saving at the same time
In the long run, you will be able to keep up with your long- and short-term financial goals, no matter what.
3. Keeping An Eye On The Financial Progress
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You can’t expect a child to work on improving his grades when you are constantly reminding him how bad he is doing already!
That child definitely needs some inspiration to keep doing his best!
The same goes for you and your efforts to free yourself from overburdening debt!
Therefore,
- Keep a mindful track of your Equifax credit report
- Compare the old and new prices
- And pat yourself on the back for making improvements
- Look into your income statement
By doing so, you will not only be able to realize how well you are doing but also know
- If there’s something wrong with your report
- If there are some money-draining holes in your monthly spending
- If inflation or food prices are going up
And how to make changes accordingly. Moreover, if you want to ensure that you keep moving in the right direction, it’s evident that you check on your financial progress regularly.
See: Your Guide To Personal Finance Review & Evaluation!
4. Spending Less Than Income
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This is one of the most important habits of debt-free people you need to adopt right away!
More appropriately, staying within your means can turn out to be a game-changer.
This is directly linked to your
- Financial habits
- And how well you are aware of your average income
Therefore, spending less than you earn results by
- Practicing a financially sustainable lifestyle
- Saying no, where needed
- Finding inexpensive alternatives to have fun
- Mindfully keeping credit utilization in check
- Prioritizing utility bills and credit card payments than luxuries
Moreover, to make spending less than your earnings a reality, reach out to people having the same financial goals as you do.
Talk to them. Improve your financial literacy and see why making that car purchase can be a liability than an asset at the moment.
Now, onto the main question, how can you do that? Or, in simple words, how can you ensure you don’t spend more than you earn?
By avoiding overspending! Is that easy? Well, it can be if you follow the 30-Day rule.
5. Strategically Spreading Out Sources Of Income
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Let’s get it straight; you can’t save, spend, and pay your loan payment in a month when your income can hardly cover your basic living cost.
So, what should one do?
First of all, stressing over such a situation is definitely not the answer!
Secondly, the long-term solution is to
- Spread out your sources of income
- Find a side hustle that adds more to your personal finances instead of wasting your precious time
- Monetize a hobby or skill that is actually in demand
Or, create such a financial system that lets you earn passively without asking for your 24/7 input.
This will
- Keep you prepared for emergencies
- Reduce your chances of turning toward a loan when hard times knock.
In short, it will double your financial progress instead of the other way around.
Bonus Tip To Be Debt-Free:
Alongside practicing these habits to be debt-free in your life, ensure that you also take full advantage of options like a savings account and tax refunds.
This will help you make sure that your hard-earned money is spent rightly without creating a situation where you are paying too much.
Bottom Line
Nobody wants to live in a hassle and struggle with clearing debt even in their late 50s or 60s.
That’s the golden period you should enjoy - a prime time. However, that’s only possible if you work on being debt-free for retirement early in your age by acing your savings.
Don’t worry. It’s not that hard to do!
All you need to do is adopt some habits that will push you in the direction of living a debt-free lifestyle.
Lastly, we are sure these very tips will also help you secure funds even when your credit score is not doing great.
