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38 Vital Steps To Get Out Of Debt


Money Management: Simple Tips to Reach Financial Freedom - Beginners Guide to Saving Money, Living a Debt Free Life and Retire a Millionaire


  What is it like to be debt free?

A lot of people do not understand what exactly it is like to be free from debt. So many young adults usually start out their independence by going to college and taking out student loans so that they can finance their education. They can also take advantage of the different credit cards that is giving to college students and before they graduates they might be owing thousands of dollars in just credit card debt. Immediately they are able to graduate, they sometimes move onto car loans and even mortgages, they never stop to think about how to become free from debt.



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Always think about the amount that you normally pay every month in consumer debt and what you will be able to do with it if you were not actually using it for payment of debt each month. Let’s say you have about $5,000.00 in credit card debt, a car payment and a student loan payment you will have to be paying about $300.00 to $700.00 in just debt payments every month. Now what if you had that much free money you can add to investing or savings, your wealth could easily start to grow. One of the habits of broke people is paying interest each month on their debt.  



Free from debt also means freedom. You can easily quit your job if you are not happy with it without you worrying about whether or not you will be able to make your payments or even keep your home. It also means to be free from the weight which debt has because debt is a very big worry that will always be right there at the back of your mind, even though you are very good at ignoring it.

Some people actually see credit as a very simple way that they can use to get the things which they want now. They usually do not look at the cost and consequences which debt really brings on the long run. Living debt free actually let you live the kind of life that you will like to live.  




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It is very good to always think about living free from debt because a life that is without payments is very different from the one with payments. Living free from debt actually means saving up for things. It also means making lots of sacrifices and resisting impulse buying. It also means having to limit the amount of money which you waste every month. It actually means planning for the larger purchases and then making sure that you are only using your money just for the things which matter most to you.

In order to become free from debt you will have to create a plan for debt payment. To start with you will need to list your debts according to interest rate. Then you will have to find some extra money which you can use to apply, to your debt every month. This can easily mean taking on a second job or cutting back on your expenses. Then you can apply all of the extra money to the very first debt that is on your list. Immediately you have be able to pay it off you will then move on to the next debt, you will also have to apply the extra money also with the payment amount from the first debt. You will continue like this until you have be able to pay off all of the debts.  




This is a system that is actually called a snowball strategy because as the payments normally become larger with each debt payment you can simply pay off the rest debts very fast.

So depending on how big it is the amount of debt which you are owing you may have to focus for over a year or even two in order to be able to pay off your debts. So if you have a very big amount of debt, it will be very good if you break down the plan so that you will always have milestones that you meet along the way.

Immediately you have become free from debt, you will have to make the commitment not to go into debt again. This actually means sticking to a budget. It is very important to always remember that to be free normally comes with living free from debt. So don’t ever let all of the work it took for you to get there, easily go to waste, by starting to take on some additional debt.  



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1...Living a debt free life tips

Being free from debt is just half the battle; staying out of debt is the most problematic for so many people. After all, when you’ve be living on a very tight budget for some months, or even some years, in order to become debt-free it will become very tempting to feel that there is no pressure once you finally hit zero.

Finally you will start considering about moving to a better property, about vacations, or about upgrading your old car that is tired. But you will have to wait there just a moment, because if you decide to just rip up the budget and start to spend again exactly the way you have been doing before you first got into debt there is a very strong risk you will finally end up exactly back where you started.  


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So, if you will like to live free from debt there are a lot of things you should be considering:


2...Refuse New Sources of Credit

  If you are actually free from debt it’s always tempting to see the offer of a loan or a shiny new credit card as a very good news. But the truth is that old habits normally die hard, and if you have be struggling with debt in the past there is a very good chance that you will also struggle again with debt in time to come. Just like an ex-smoker taking only one cigarette these things normally have a very nasty habit of quickly going out of control. So say no to temptation by saying no to a new form of credit.


3...Track Your Spending

  Just because you are now free from debt doesn’t actually mean that you start spending freely. Even people that have no debt usually have limits on their finances; never overstep the mark so that you won’t find yourself having to go into credit in order to be able to make ends meet. So whether you will have to maintain a full-blown budget or you are just keeping a broad eye on your spending it is actually up to you. The key here is to always measure and monitor your spending because doing so will actually give you a “feel” for your spending.  




4... Plan Your Finances

  One main reason why so many people usually get into debt in the very first place is that they always fail to plan ahead. Their car dies and money is not available for a replacement. They actually need a car in order to always be able to meet up with work so they end up having to buy one on credit. Most times the loan normally lasts longer than the car itself.

  Now compare that to someone who actually knows that they will need a new car in the next months or even a year and then they start putting money aside every month for this purchase in the future. So when it is time they will be fully ready for the changeover.  




5...Maintain An Emergency Fund

  An emergency fund is a source of cash that is easily-accessible which you can easily dip into in times of emergency. Two good examples could be if your car needs emergency repairs or your washing machine packs up. We normally don’t have a crystal ball so adding such expenses into our budget is not really possible. This is where emergency funds normally come in.


6...Take Pleasure in Denial

  We normally expect a nice house, a new car, and all the best things necessary. All this stuff costs lots of money – and that money has to come from somewhere. So many people usually maintain these expectations that are unrealistic of being able to always have whatever they need. They don’t care if it actually has to go on credit – all they normally care about is simply to upgrade to the new iPhone today.  




  The truth is that changing our expectations is actually a key success trait for living a debt-free life. Always try to adopt a mentality where the money you have in the bank is worth over the money in a shop till. You will have to take pride in managing in order to prevent unnecessary spending, and then in building up savings.


7... Learn To Appreciate What You Have

  The last tip in living a life free from debt is actually the most necessary of all; always learn to actually value what you already have. Take a good look around you now and think about your home; all the belongings that is inside. Look at the TV, the furniture, the cell phone, the computer you are making use of right now and also the kitchen which is full of gadgets.  


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  Then also have a look at the non-physical things, you have light and heat whenever you will like to have it, you have family and friends, you have passions, interest and things you normally look forward to and hopefully you also have your health.

  Now remember that there are so many people who would give anything in order to have what you actually have right now, and live the life you are living right now. Once you start to appreciate what you have, adding to your lot or upgrading will suddenly seems less important. So actually start to see your life with fresh eyes. Simply take a look at all the good happening around you and immerse yourself in it.  



8...Debt free lifestyle

To so many people this might appear impossible, but a lot of people usually succeed in living all their lives without any debt. People that are of different ages and income levels have be making this very choice. It’s not a very simple feat, but the truth is that if this something you really want, then don’t ever allow naysayers talk you out of it. Some people who are dedicated to saving always even results after committing to a spending diet or spending fast, in which people that participate actually set limits on how much money they are going to spend on some particular wants and needs. There are different ways out there for people who are looking to cut spending, then pay back debt, or even avoid it all together. The most necessary thing is to select the system which will actually work for you. You are the person who knows what exactly your weaknesses are, so decide accordingly.  




In a research by the Urban Institute over 35% of American adults have a report of debt in collections. This normally include non-mortgage debt which is over 180 days past due, like a medical bill, credit card balance or utility bill. There are a lot of ways to look for legitimate debt assistance or even strategies that are helpful for coping with debt. Whether you have be in debt in the past or not, just know that it is still within your power to always keep it out of your life when going forward.


Here are six methods you can use to avoid incurring debt completely.


9... Build a large savings

  The fact remains that working toward a savings account that is sizable is always very hard, but it’s actually the way that is most important in order to stay out of debt. You can always consider your savings as a preparation for expenses which are unexpected. This way, whenever car repairs or medical bills pop up, you won’t find it difficult to get it done with. Saving is very important for some long-term expenses that you might not even be ready for yet, such as a new home or even a child’s education. Your savings will definitely come in handy for some more enjoyable purchases also, maybe like an impromptu trip. But what if you don’t have a good balance in your savings account, then unexpected costs of life will simply sneak up on you, thereby becoming a threat to your debt-free lifestyle.  




10... Pay off credit card transactions immediately

  It’s not actually important to always deal exclusively in cash in order for you to prevent debt. For most people it assists to make use of physical currency in order to avoid buying on impulse or running up a big credit card balance. A credit card normally makes certain things simple, such as renting a car, traveling, or even making hotel reservations, actually charging purchases isn’t the only method you can use to build credit. If you actually know that a credit card isn’t what you can simply handle, don’t just get one. But if you actually decide to have a credit card, just try to make it a strict rule to simply pay off every purchase you make on that same day. Don’t ever wait for monthly bill because this will definitely force you to have a look at how much money you have in your budget before you swipe.  



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11...Buy a cheap used car

  Most Americans who are middle class can’t easily afford to purchase new cars outright; a lot of them normally take on a car payment. But the truth is that no one actually needs a car loan because there are so many used cars out there that are reliable. Although there is some risk involved in buying a used car, but also there is risk in dealing with salesmen that are crafty at dealerships, who normally upsell you on restrictive and expensive warranties. All you need do is make some research on some reliable car models, look for a very good mechanic, and then make use of your best judgment whenever you are buying your car. You might easily get a very good deal on a car which will last for years with just little maintenance. Public transportation is also a choice that is affordable as well, it just depends on where you are located, but in most rural areas a car is very important.  




12...Go to community college

  As long as higher education is concerned, students who are willing to take out loans actually have more options, and so many of them wisely choose to go this way. But that doesn’t really mean you have to borrow money in order to get a good education. A lot of students save thousands by just starting at a community college before they transfer to a more prestigious university.



  Renting for life normally sounds like a nightmare to a lot of people, but real estate is not very cheap. So if you will really like to stay free from debt, housing will definitely not be your biggest issue. That said, saving up for a very good home is actually plausible for most Americans who are middle class. Yes, it will actually take a very long time, depending on the level of your income, but spending a lot of years saving and renting could easily be a very rewarding experience.  




14...Buy only what you need

  People who normally like buying on impulse won’t like this one, but a huge amount of money can simply be saved by practicing one straightforward plan: Always think before you buy. In some instances, you will have to think very far in advance before you buy. Always make research on the best deals and then practice listening to the small voice in your head that normally asks do I actually need this?  


15...Living debt-free and truly wealthy  

Debt-free is very clear in its meaning, but what exactly does truly wealthy mean? Becoming truly wealthy is actually a relative term that has a very important meaning. It is based on the core that everybody has several definition of “wealth.” To most people it is as simple as just having food on the table and a roof over their head and that of their family. For some others it is actually being able to assist in sending their children to college, while some others are actually dreaming about swimming pools which are diamond-studded.

The meaning of living truly wealthy is actually to be able to save, spend, plan and invest very wisely for the future, and then be independent financially while still having enough to donate to some worthy causes.

When you think about people who that are consider wealthy, it is not actually about going on vacations every month and purchasing everything on the shelf. It is all about being in control of your checkbook. It is managing your spending wisely, so that all of your needs are easily taken care of. It is actually knowing the right time to say, ‘no’ and not worrying about how and when you are going to pay all of your bills.  




Being able to save and invest for the future is the very next part of being truly wealthy. It is usually about knowing when to keep money aside for the necessary things to come. It is knowing that a rainy day is definitely going to come and being ready for it. In addition it is about wise planning, to ensure you can retire someday.

The very next step in being truly wealthy is to be able to assist some other people because there will be so many people who are passing through a very difficult time and need assistance. This can easily be a total stranger, a friend or even a family member.


16...How to get out of debt and build wealth

If you will like to know how to get rich, there's just one answer: Learn to become an entrepreneur and the very first step on that journey is to make the commitment not to become consumer but a producer, because a producer normally uses his or her time doing things that will accumulate wealth, while a consumer always transfers his or her wealth to another person.  




Becoming free from debt is a very important starting point on the journey to a producer's mindset.

Now how exactly do you begin? By having the right habits practiced by people who are free from debt, which actually happens to overlap with that of the producer's mindset.


17... The habit of restraint

  Restraint is comprised of self-control, patience and dispassion. It's actually the ability to conquer temptations--such as buying on impulse. On her site, the truth is that a person who actually practices restraint can even take things a little further, deciding not to ever spend at all on anything such as a car that will depreciate, and rather invest in assets which will ultimately produce lots of returns.  



18...The habit of experientialism

  Have you ever heard people talk about how they are going to have experiences than things? Well, that's actually part of it. People who have be able to adopt a producer's mindset can easily appreciate extravagance and even quality. But they're normally able to keep their distance, and they also know that just few material things are lasting and spiritually nourishing.


19...The habit of frugality

  Do you think frugality only mean being cheap? Well that is not what it means exactly. Although it true that producers live below their means and the truth is if you are free from debt then you are probably living below your means. But this also has eagerness or even a willingness to easily look for deals and negotiate.  


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20...The habit of strategic thinking

  This habit actually means thinking before you act and also having a plan. Again, with this habit you will have to do away with impulse buying, and then spend money primarily where it will bring a real and lasting benefit.


21...The habit of mathematical thinking

  This is the habit of thinking about math and real producers normally pay lots of attention to the math. They actually educate themselves about basic concepts, beginning perhaps with the power of compound interest and the time value of money. And in a place where all those who want us to start acting like consumers sometimes try to hide the calculations behind any deal, they always work hard to find it.


22...Benefit of living a debt free life

For so many people, being free from debt is a very good way to live for some good reasons because if you aren’t held back by some financial obligations, such as payment of loan, you can easily live a life that is rich in so many ways.  




Listed here are some of the benefits of being debt-free.


23...The Freedom to Choose

  The truth is that you will see yourself trapped on the debt treadmill whenever you are overburdened by debt. Being free from debt will definitely put a spring in your step, because you now know that you are not obligated. So instead of you to start putting any more earnings into debt, you can easily make use of the money on whatsoever you like, such as giving to charitable organizations or even traveling.


24...Relief From Anxiety

  Do you know that there’s lot of anxiety in owing money? knowing that you are expected to make payment for a particular amount on bills such as auto loans and credit cards can be unsettling, most especially if you have a very tight budget. Then there is the anxiety which comes whenever you have to put together your mortgage payment every month. Just pay down your debt and then you’ll have an immense relief when you know that if anything occurs and it makes your income limited, you won’t need to start worrying about making debt payments.


25... Increased Savings

  Free from debt actually means paying no interest and then no interest means that you can easily funnel a very good amount of money into your account to save. In addition, savings let you build an emergency fund and then simply save for retirement.


26...More Fun

  When you are free from debt then funding your dreams will become a whole lot easier. With the money that you are going to be paying toward debt you can easily create a “fun fund” which allows you to simply enjoy life and then do things such as traveling all over the world or just take up a hobby that is new without even worrying about the expense.  




27...Better Financial Health

  When you are free from debt, your credit score and some other financial health indicators, like debt-to-income ratio (DTI), is normally very good. Although this may actually not seem very important because your goal is not to get more credit cards or loans, good credit is very useful in so many ways. Because potential landlords can easily use your credit score in order to decide if they will rent to you, and you will also get good car insurance rates and then prevent paying deposits on cell phones and utilities.


28... Increased Security

  Being free from debt normally makes the prospect of losing your home less likely, and this actually means that you will not have to worry very much if for instance you lose your job. If maybe you become unemployed, then you’ll have all the necessary security to search for the right position instead of going for the very first thing which comes along because you need to pay off your debt. Living clear and free also means that you can simply leave a job that you are not happy with without having to worry about your finances.  




29...Take control of your money

People all over the world today enjoy a lifestyle that is luxurious and they also have interests which normally require them to spend a lot of money. While you may not stop indulging in the things you enjoy, you will also need to plan your finances in a way where you won’t end up living paycheck-to-paycheck. Always make sure that if you earn $5,000, you save at least $2,000 each month. Don’t lead a lifestyle where you earn $5,000 but use $7,000.


30...Create a life time income plan

After so many years of working very hard and diligent savings, you now have a tidy nest egg and you are also ready to retire. The issues you are facing now is actually the need to make your nest egg last very long as you do. If your biggest financial fear is outliving your money, then the lifetime income annuity may actually be the right thing you need.  




Immediate annuities also known as lifetime annuities normally start with a very easy proposition. The investor gives out a big amount of money in exchange for a payout for life that is guaranteed.


31...Create streams of income

For so many people who actually values financial security and ultimately want financial freedom, then having at least one additional stream of income is no really a luxury but it has become a necessity.

Diversifying your income stream is very important in order to protect your family and yourself against the ups and downs of industry and economic cycles that are unavoidable. Consider having at least maybe one or even more additional streams of income to generate cash flow because of the financial risks that normally come from depending on one source of income, such as a business or even job.  




The additional income streams that you choose can be passive or active; it can even be a combination of the two. Some can easily pay you for doing something that you love to do (active), while some others can actually pay you without you having to usually do much of anything at all (passive). You can also diversify your income streams among various sectors in order to protect you against big losses during downturns in one market and let you to benefit financially from the upswings in another.


32...Save, invest and get better returns

So many new investors usually don't understand that investing money and saving money are 2 different things entirely. They normally have different purposes, and they also play different roles, in your financial plan and your balance sheet. Making sure that you are very clear on this fundamental concept before you start your journey to finding financial independence and building wealth and is very important because it can easily save you from a lot of stress and heartache.  





Saving money can be described as the method of putting cold, hard cash aside and then parking it in very safe, and liquid (meaning that they can easily be sold or even accessed in a very short period of time, at most just a few days. This can simply include savings accounts and checking accounts which are normally secured by the FDIC.

Investing money is actually the method of making use of your capital or money, to purchase an asset which you actually think has a very good probability of creating a safe and also an acceptable rate of return over time, thereby making you very wealthy even if it really means suffering volatility, perhaps even for some years.  



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33...Personal Finance

Personal finance can be described as how you manage your money, which includes your savings, income and expenses. When you are able to put your effort into your personal finance management, then you will have a very good grasp on the place your money is actually going and the changes that you can easily make in order to meet your future financial goals.


34...Money Management

Money management can easily be described as the process of budgeting, investing, saving, spending or maybe overseeing the capital usage of a group or an individual. The actual use of the phrase in some financial markets is actually that of an investment professional that makes investment decisions for big pools of funds, like pension plans or mutual funds. Money management can also be called "portfolio management" and "investment management"


35...Teach your children the value of money

Writing, reading, and arithmetic actually don’t include personal finance in them. Some kids normally learn only the basics of money and how to make change in grammar school, but probably they won't learn how to be able to manage money unless maybe they decide to choose finance as a career path. This means that it is up to all of us to make sure that our children grownup ready to face life's fiscal challenges.


36...Understanding Debt

Debt is usually money that is owed to an entity or a person which must actually be paid off by a deadline. For instance, credit card balances, student loans, mortgage loans, and car loans are all types of debt. So cutting expenses and taking some other steps in order to manage your money better can easily assist you avoid or get out of debt.

Maybe at some period in your life, you will definitely have debt. But how exactly will you know that you have got too much debt? The truth is that your yearly debt payments (credit cards, car payments, bank loans) should not be over 20 percent of your take home income yearly.  


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37...Establish a budget

The fact remains that setting up a budget can be a very hard task. But there is actually no reason to be afraid of this process. Immediately you have be able to set up your budget then you can simply see where your money is going exactly and how much you really have left to spend and save. Just follow these easy steps.

·        Determine Your Income

·        Determine Your Fixed Expenses

·        Determine Your Variable Expenses

·        Compare Your Expenses to Your Income

·        Track Your Expenses

·        Adjust as Needed

·        Evaluate Your Budget

38...Wealth Management

Wealth management can be described as a high-level professional service which adds accounting and tax services, investment and financial advice, retirement planning and legal or even estate planning for just one set fee. Clients normally work with just one wealth manager who actually coordinates input from some financial experts and it normally include some coordinating advice from the client's own accountants, attorney and insurance agent. In addition some wealth managers also give banking advice or services on some philanthropic activities .



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