Becoming a Debt Free Person
Living life debt free seems like an unattainable dream to most people. Society has encouraged quantities of debt through financing, credit card and rent-to-own merchandise. Do you ever feel resentment toward the person you owe or to the item that was purchased? It is hard to enjoy what we feel tied to!
There are three things that should be accomplished in order to become the debt free. First, an honest cash flow analysis should be created, giving principles should be implemented, and future purchases should be disciplined expenditures according to a
realistic budget. Below is a look at each of these three areas in more detail.
Cash Flow Analysis
In order to understand how to reach the goal of becoming debt free an honest assessment of the current financial situation needs to be completed. You can do this yourself by finding a cash flow or budget spreadsheet and tracking your expenditures for
the month. Different Excel spreadsheets can be found online at microsoft.com and by searching for “budget templates”. Once you have the template you will utilize this to track any expenses you have each day no matter how small. In order to gain an accurate
picture of spending patterns, the expenditures should be tracked for at least one month (assuming all bills are monthly or more frequent).
Spend time looking at the things that were purchased during the month and how many of those were consumables such as meals eaten out, or coffee drinks from the local coffee house. Finding a less expensive alternative or foregoing these items altogether will allow more money for paying down credit debt. Becoming debt free will take discipline if progress is going to be made on outstanding credit debt. Consider alternatives such as packing a lunch instead of going out for lunch each day. A healthy and filling lunch can be made for about 25% or less of what it costs to eat out. Saving five dollars a day on meals during the week equates to an additional one hundred dollars a month!
Becoming debt free through Giving
It is a fact that giving attracts positive influence and blessings to those who give. This is a natural law that is used by people everyday both Christian and non-Christian to achieve wealth and financial blessings. Often overlooked, this principle is very powerful and important step to achieving freedom from credit debt. Start off with a small amount each month to your church, as an anonymous gift to a person in need, or to a local charity. Budget this money to come out first in your budget instead of last or it won’t happen.
Using Discipline for Future Purchases through Budgeting
Once you know where your money is being spent and you have dedicated yourself to becoming a giving debt free person it is time to focus on the discipline it will take to gradually get out of credit debt. If you are married it is very important to be on the same page with the guidelines you have decided upon for future purchases. Make a decision to hold one another accountable for any purchases over a certain dollar amount that you decide
upon. Keep in mind the goal that you have and the benefits and freedom you will feel once you have become a debt free person.
It may help to print out each credit debt you have and place them on the refrigerator door so that you can track the progress of the paying down of each credit debt. It will help to start with your smallest credit debt no matter what the interest rate is and pay it off first. It is important just to get started and with each credit debt that is paid off you will gain confidence and have more money to roll onto your next largest credit debt.
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