Top 5 Ways to be Debt Free

Being physically fit is a priority for most and very well should be, but becoming financially fit or debt free should be equally as important. we should all strive to be financially fit and debt free. Here are the top 5 ways I’ve personally found have will lead to being debt free and maintaining financial fitness.

Debt Free top five…

  • #5 – Never Spend More Than You Earn
  • One of the fundamental principles of personal finance is NOT to spend more than you earn. In fact, you should avoid spending the same amount that you earn. If you spend more or the same amount that you earn then you will not have any money left over at the end of every month to pay bills or take care of an emergency. If at all possible, spend less (preferably a lot less) than you earn every month. Use the remaining money that you save by spending less money every month to make wise investments that can yield a big return and help you live debt free.

  • #4 – Focus on Needs versus Wants
  • Individuals striving to be debt free should always remember to focus on Needs versus Wants. Needs are things or services needed to maintain a basic lifestyle. An example of a need is electricity. Electricity is needed to maintain a basic lifestyle. On the other hand, wants are desires to have certain items or entertainment. An example of a want is Rolex Submariner Watch. The Rolex watch is considered a want because there is the desire to have an exclusive, name brand watch. If the need is to obtain a watch to tell time, then a cheaper less exclusive watch can be obtained. Save money by focusing on what you need and not what you like.

  • #3 – Stick To Your Budget
  • To obtain financial fitness, you must prepare a good budget and stick to your budget. A budget is simply a summary of probable expenses and income for a given period; it is your own personal guide to becoming debt free. Budgeting is essential because it provides you with the data needed to make wise financial decisions on a weekly, monthly, and yearly basis. Strategically, place your budget in an area in your home or apartment that you frequently visit often (e.g. refrigerator). Update your budget periodically as your income and monthly expenses change. Last, but not least, believe in your budget. Numbers don’t lie so if your budget indicates that you are spending too much on entertainment every month then you are probably spending too much on entertainment.

  • #2 – Seek Sales, Discounts, & Rebates
  • A great way to exercise your financial fitness is to seek sales, discounts, & rebates when shopping. Many supermarkets and department stores will offer lucrative sales and clearances on household items, food, clothes etc. All you have to do is spend a little time searching for these lucrative sales and clearances. Why pay full price for items that are already overpriced? Be the economically intelligent consumer by spending the time to find where and when you can take advantage of these money saving opportunities.

  • #1 – Make Your Own Financial Decisions
  • The number one way to obtain and maintain financial fitness is make your own financial decisions. There are some money people in your life that can sway you from making a wise financial decision. Perhaps your best friend just went into debt to buy a new Jaguar, and now your best friend is trying to persuade you to do the same thing. Remember, once a bad financial decision is made, you are stuck with the negative consequences (i.e. debt, creditors, stress, etc.). When making a financial decision, eliminate outside opinions from your decision. Make your own financial decision based on understanding your budget, financial goals, and current financial status. This simple rule-of-thumb can ensure that you don’t live with the negative consequences of a bad financial decision.

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