Staying out of debt
Your commitment to debt free living doesn't stop at a zero debt balance. You've got to resist the temptation to start the unhealthy spending habits that got you into debt in the first place. Unfortunately, a lot of people rescue themselves from debt only to fall back into their old habits after a few shopping sprees. A zero balance on your credit card means you have that much to spend, ZERO!
It always surprises us how often smart, successful, rational people continue to make the same stupid mistakes two, three, and four times. Here is a list of things you can do to prevent yourself from falling into those blunders:
- Keep track of your spending: Now that you're debt free you don't necessarily have to watch every penny, but you do need to have a very good understanding where your money is going. Making a list of essential items helps keep impulse purchases at a minimum.
- Pay cash whenever possible: We know cutting up your credit card isn't the most practical idea, in fact credit cards are nice to have IF you can manage your spending correctly. However, it's best to save your credit card for emergencies or when no other form of payment is possible (ex. internet shopping).
- Think about that purchase: Every time you think about reaching into your wallet, think are you overpaying? Can you really afford this? Have you been that savvy shopper and is this really the cheapest price? If you can answer yes to all of these then you're making a sound purchase rather then a back in debt impulse buy.
Investing your new found money!
We're not going to go into detail about investing but below you'll find a list of good places to invest your money. Then when it comes time to retire or buy that next big needed purchase you won't have to charge it.
- 401(k): Probably the most common type of retirement plane that many companies offer. You choose a percentage of your salary to be withdrawn and deposited into a 401(k). The money generally can't be touched without a severe penalty until you're 59½. Most employers will often match in whole or a percentage of the amount you contribute. In essence this means your company is giving you FREE money!
- Money Market Funds: Money market funds are similar to a regular savings account however money market funds normally tend to pay high interest rates. Setting up a direct deposit into this type of account works very nicely
- Mutual Funds: Those of you that don't know the stock market inside and out, mutual funds are a great way for a novice investor to get started in the world of stocks and bonds.
Enjoy, your debt free!
I hope by following these tips, they help you become debt free the same way as these tips have helped others in the past. Remember create a budget, snowball those debts, and invest and you too can reap the rewards of being debt free!