The fact that you are now at “debt zero” is immensely gratifying, as the only direction your net worth could go is upwards. But still remain cautious!
Even though you are on the right track in regards to managing your finances, staying debt-free is not easy. It is going to be one of the biggest challenges you face. Here are a few things that being debt-free will teach you:
Saving Money Is A Skill That You Need To Practice
Saving money is not as much fun anymore as you are not paying off your debt. The skill of saving some money from your total income is something you should master.
As most people fail to do so, they are left with little money or no money by the end of the month. After becoming debt free a lot of people tend to save less money and spend more on other expensive life events.
This habit will only bring in more problems for you as your total savings will be much lesser than the amount that you have been spending. This is beyond the fact that the motivation to save is not as great as the motivation to pay down debts.
Most people tend spend a lot of money even despite aiming to save most of it. Therefore, if your goal is to save money, decide an amount you want to stash away each month. You need to calculate the amount you are going to be spending each month on bills and other expenses.
The amount that you are left with after paying off all your bills is the amount you need to save. If not the whole amount, make it a habit to at least save some of it. This way, you will be left with at least some money by the end of the month.
The money that you save can even be useful in emergencies. Medical emergencies can happen unexpectedly and it is better you have at least the initial amount required during this time saved in your account.
Otherwise, you might have to take out loans again and keep paying the debt every month. Therefore, saving money is very essential and a habit that you need to develop for keeping yourself debt-free.
It Is More Important That You Save Your Savings
Are you equally guilty of taking money out of your savings to spend it on one thing or another? Most people are. And a lot of people have the habit of taking money out of their savings with the aim of depositing the same amount back later on.
If you have a similar tendency, the only thing that you need to know is that this habit might push you down the path of further debt again.
Proper budgeting will allow you to resist such temptations. Although, it is just as possible that you might have to take money out of your savings, despite budgeting your expenses, as in some cases that might be the only option available.
Life is expensive – we get it!
Once you are debt free, your budgeting skills are going to be put to the test. There are going to be moments in life that will force to spend your savings and start from square one. You might decide to move to a new place, your car might need servicing so that it functions properly, or you might decide to go on a trip.
There are going to be times where you are paying for somebody else’s mistakes. All these events are going to affect your savings and your budget. You might even have to go through medical treatments that may cost you a time. Later, you will have to submit the receipts so you can be reimbursed.
Ultimately, life is going to happen while you are learning to save.
Falling back into the trap of debt
Fight that urge of swiping a credit card if you are serious about not falling back into the pit of debt.
For example, you might need to replace something in your house for example like your bed. Instead of swiping a credit card and buying a new one, you must plan in advance. You need to calculate the amount you need to save before you go out to purchase a new bed.
You can first go out and do some research on how much the new bed is going to cost you.
Don’t be enticed by salesman offering zero interest repayments on credit card deals. Once you swipe that credit card, you are back in debt.
Find ways to earn money to increase your savings
There are various ways to earn money. You can sell some unwanted items in your house to earn some cash.
You can rent out your garage space or maybe one of the rooms in your house. If you are looking for bigger income sources, you can sell the properties you own or can sell your car to buy a smaller car which is equally comfortable. You can even make some decorative items in your house and sell them online.
One way you can boost your savings is by checking if you have any PPI policy taken under your name. If you discover that you do have a PPI policy in your name and that you were mis-sold the policy by your bank or the lender, you can always make a claim all by yourself.
Experience The Bliss of Being Debt Free
Sticking to your budget can be difficult but living a debt-free life is bliss. Not having to constantly worry about repayments is very relieving. You may feel the urge to swipe sometimes, but the decision to get out and stay out of debt will give you more freedom than you could have asked for.