That life is expensive is a truth we are unfortunately keenly aware of. It seems like everything gets more and more expensive day after day, and it's becoming more and more difficult to afford it all. Most of us try to solve at least some of these issues by taking out loans, but then there's a debt problem to tackle and that can tank your credit - find out more about that at Experian. If you find it hard to pay off what you owe, here are some tips for achieving a debt free life.
1. Do Not Live Above Your Means
One of the major mistakes people make is living above their means. Class anxiety is a very real thing and in our attempt to keep up with the Jones', we've all been guilty of spending more than we can afford on certain things that would make us look a certain way or give us some perceived social status.
But that's a one-way ticket to going into debt, so you need to avoid that kind of behavior at all cost. All you need to do is exercise some restraint and follow a simple rule - don't live above your means. Here's how to quickly and easily figure out what your budget should be and how to stay under.
How much do you earn? - Your income and total amount of money you have per month is important here because this is your spending limit. You need to sit down and crunch the numbers and figure out how much you actually make in order to determine how far you can stretch your budget.
How much do you spend? - Then you've got to see how much you've got going out, compared to what's coming in. Are you spending less than you make, or more? If it's the latter, you should know it's not at all a sustainable lifestyle.
2. Reduce Costs
If you do find that you are living above your means, the first, and most logical step, is to cut down on your spending. There are several ways in which you can reduce costs in order to avoid going into debt to fund your lifestyle:
- Only buy essentials - If you're on a budget, luxury items are a non-starter; stick to essentials, at least until you get back on your feet.
- Shop around - Don't just go for the first price you find; shop around a little and you will be surprised to find better deals for the same products.
- Resist impulse purchases - Repeat after me: "I don't need it and I'm not going to buy it!"
- Be wary of credit cards - It's easy to just chuck all costs on your credit card, but that gets very dangerous, very fast when payment time comes around.
3. Earn More
Of course, you can also go the other route and instead of limiting your spending, you can try to increase your earnings. There are also several tips you can try here:
- Ask for a raise
- Look for a higher-paying job
- Take a second job or part-time work
- Take on some freelancing on the side
4. Don't Borrow More Than You Can Repay
If you do find yourself in need of a loan, don't take it as a personal failure - we've all been in this position. The trick is to just manage this situation responsibly. All you need to do is figure out how much you can afford to repay per month and make sure you don't borrow more. A loan calculator like the one made available like the Money Advice Service can come in handy for this purpose. Then, do your best to manage your budget accordingly and always prioritise your loan instalment over less important expenses.
In conclusion, a debt free life is entirely possible and achievable by anyone, if you just make financial responsibility a priority and follow some easy steps.