Effective Tips to Live a Debt Free Life

One of the most fortunate things that can happen to anyone is a life free from debts of any kind. It means peace of mind and that little freedom from heartbeat skipping when the phone rings from lenders and banks. Debt free life is only an illusion. In real life that seldom happens however hard you may try, unless you have been blessed with a large legacy that had brought in untold wealth. More wealth in your hands does not assure you of a debt-free life either. Often, greed for more money, wealth and a desire for more opulent lifestyle can unwittingly lead anyone into the pit we call debt.

Debt, understand, is often the direct result of trying to gratify needs and desires for which the indebted had fallen prey. The desire to gratify itself needs to be controlled with zeal. Where does this desire for instant gratification flow from? The most frequent reason is often the society in which we live and had grown, and more frequently the desire to accumulate wealth disproportionately to our needs. In their quest to make lots of money, which in itself is not a vice, people unwittingly borrow money without even having any means to repay on time. The first rule therefore is, do not be tempted into leading an opulent lifestyle.

However, to lead a life free from debt, it is not necessary that you have to go without the goodies of life. It simply means you should be a little prudent with how much you borrow, how frequently you borrow and the purposes for which you borrow, and of course an airtight plan that will let you repay the debt on time. Here are some tips that can help you lead a life free from debts, and most tips presume that you will stick to a life of discipline. It may be a little hard in the beginning, but the good thing is you will get used to it as you bid your time.

Have a Budget and Don’t Stray Beyond

If you ever had the opportunity to ask someone how they are free from debt, the first reply you will hear is they live by a budget. Having a budget and living by it does not mean you spend less and lead a stingy life putting everything into savings. The purpose of life is to live and enjoy and for that you need money. The first step therefore is having a realistic budget that does not include borrowings and loans. In short, it has to be your earning and income only. When you apportion money, provide for the rainy days, even if you don’t foresee any. Expenses can come at lightning speeds and stay with you for a long time. The important point you need to note is savings should be set off first, not last. Trying to set if off as the last entry in your budget means you will never ever try to save.

Liquidate Debts Wisely

Debts can be of two kinds. The ones that cost you a lot to service and others that can be paid over a longer period of time due to lower interest charges. Among those debts that can cost substantially are car loans, personal loans and payday loans. They are the ones you need to tackle first. Try repaying them without delay, because, default often means huge penalties and increased installments. In fact, postponing a short term loan can increase interest rates to shoot up disproportionately, and accumulated interests can even get included as principal payments. You will need to avoid that at any cost. Home mortgages on the other hand are long term commitments and cost lesser to service. Therefore, even if you have enough money coming from unexpected sources, don’t consider advancing your payments toward home mortgages. You will get very little by way of rebates. Lenders, you should understand, want repayments at a fixed pace, not an advanced payment. Instead, keep the money in savings or use it to buy another property paying cash down.

The Best of Tips

That you have a steady job and adequate income is not necessarily an insurance against debts plaguing you in future. Time and again, it has been proved that a country’s economy can take a down turn anytime. Although considered to be good enough, putting all eggs in one basket can be counterproductive, so, when you make investments, spread them across different venues. A little in real estate, a little in stock exchange and some in valuable metals like gold, silver and platinum will ensure that your investments don’t erode in value. You can always expect one investment to rescue others.

This is a guest post by Jake Anderson of fastinternetdeals.com, a site that offers savings and current information on att internet as well as att.com services.