Five Sure-Fire Tips to Live Debt-Free
If you are currently struggling to pay your home loan, cannot keep up with vehicle finance instalments, are concerned about the interest on your credit cards, and juggle between accounts to service store accounts then it is time for a change. You can live debt-free by following the tips below.
- Spend Less than You Earn
Look around the house. Many of the items bought on credit were luxuries instead of necessities. Make a list of what is essential and budget for them. You need to pay school fees and the electricity bill, and you need to pay for fuel for your vehicles. You do not need to buy fancy cheese and wine or magazines, and two holidays at the sea a year are luxuries. DVDs and take-outs are not essential items either, and your pets do not need the top-of-the-range pet food. They will still be fine if you buy them less expensive, good-quality food.
- Do not Make Debt – Wait and Buy Cash
If you want to live debt-free, start thinking long-term. You will still be able to buy the new handbag or power tool if you save up. It just means having to wait a while. People who buy on impulse and only think short-term buy on credit. Over the long term, the credit keeps them in debt and it comes with hefty interest. They pay more for the same items and get poor value, even out of the best of bargains. Do not be one of them. Rather wait until you have saved enough before you buy.
- Start Saving
Whether you buy alternative virtual currency, open a 32-day call account, or simply a savings account, make a habit of saving. If you want to live debt-free, you must develop an attitude of saving. Create an emergency fund and normal savings fund. The normal savings fund is used to save up for holidays or desired items. The emergency fund is for unforeseen expenses, such as a car breakdown, geyser problem, medical emergency, and more. With the cash available, you do not have to apply for credit to get funds for dealing with emergencies.
- Set Goals
Create a list of things to achieve and things you want. Now set realistic dates, and plan. If you want to buy a car, start saving until you have a good amount. Now look for auctions and places to buy a car at a lower price. Do not compete with friends, colleagues, and neighbours in having the best or most material things. Rather set investment goals related to how you want to live debt-free.
- Take Action Now
Do not procrastinate about the possibility to live debt-free. Pay off one store card at a time and close these accounts. Reduce fee-based subscriptions. Pay all the high-interest debts off as soon as possible. If you realise that your debt burden has spiralled out of control and it will take you years to pay it back, even when following the above tips, consider voluntary sequestration. Speak to our team of insolvency attorneys about sequestration to get rid of the largest part of debt immediately, and the remainder within a few months.
Disclaimer: Information is relevant to the date of publishing and is not intended as any form of legal advice. Please call on our attorneys for legal guidance rather than relying on the information herein to make decisions – November 2017.