Personal Finance Tips how to Establish a Debt Free Lifestyle

In today’s economy, establishing a debt-free lifestyle is one of the greatest things that you can do for yourself.  It takes time and patience, but is worth it as you never have to worry about your home being foreclosed on, or your car being repossessed as you actually own everything that you have possession of.  Many people believe this to be little more than a dream, and not really a possibility, but it really is not only possible, but desirable.

The first thing that you have to do when you are attempting to adopt a debt-free lifestyle is to stop using credit to get the things that you need or want.  This is often easier said than done, as you see things that you want, but you do have to avoid using the credit cards as that will only rack up more debt.  If you need a car, either buy a reliable car that you can pay cash for, or, if you have to buy your car on credit, make sure that you are buying one that is going to last longer than the payments are.  Even on your home, you should be saving as much toward the down payment or paying it off as you can, so that you do not have to worry about house payments.

Once you have stopped relying on credit to meet your needs, you need to start paying down your credit as quickly as possible.  Make a plan that allows you to have what you need to live on, but also allows you to pay off your credit.  Pay off one credit card or credit line at a time until they are all paid off, including your house and car.  Start with the smallest debts first, and make minimum payments on the rest.  As you get each debt paid off, add the amount that you are paying to the next debt and so on, until they are all paid off.  Do not forget to pay as much as possible toward your house and car as well.  If you do not have house or car payments, put the money away into savings in case you need them later.

As you pay off your debt, you will need to establish more savings.  In a debt-free lifestyle, your savings becomes your credit line.  If you do not have enough in savings to pay for something, you do not need it.  At this point in time, as you are paying off your debt, your credit score will be fantastic and you will probably be getting great credit offers.  Make sure that you resist the temptation to take advantage of those offers.  There will come a point, after not using credit for quite some time that your credit score may actually drop, and that’s ok, because you don’t need credit anymore.  You are debt-free.