Here are tips from the Simple Debt Free Living Website to help you reach your goal of becoming debt free.
Simple Debt Free Living is a self help plan, ideas, and resource for families and individuals desiring to become and remain debt free. Household budgeting, debt management, and frugal living are combined to provide an overall plan for success.
Save money everyday using money saving tips for a variety of areas such as, groceries, home decorating, gifts, clothing, life's events, and much more.
Sure it sounds easy. However, this first very important task can be a difficult change in lifestyle. After years of instant gratification it's a hard concept to get used to. Look for alternatives to credit purchases like lay-away and saving up for major purchases.
I'm sure you'll find greater satisfaction and reward in the self disciplined character you'll build when "instant buying" isn't an option. When resources are limited to what money you actually have to spend, it's not uncommon that people discover many inventive ways to acquire wants and needs by other means. You will become an expert at minimum cost purchasing and you will be proud of your accomplishments. After all, anyone can whip out a credit card. Debt free living requires planning and ingenuity.
2. Create a budget to live within, or below, your income.
A budget is defined as: "The total amount of money allocated for a certain purpose." In this case, the total amount of money is "what you earn" and the purpose is "living." Spending more than you earn is a certain path to financial ruin. You may be surprised at how far you have extended your finances when all is done. Most people spend 10 -15% more than they earn and have very little, if any, savings. Many are actually living on credit and relying on credit cards for the basic essential needs of living. Everyone needs a budget to be financially successful.
3. Track spending habits and reduce expenses to stay within your budget.
Save money everyday. A money saving tip a day keeps the credit card away! Small leaks sink big ships and the same is true of your budget. Little money leaks can sabotage the best of intentions. With every expense, consider the big picture! Take daily spending and calculate what that expense will cost you monthly or yearly. Small daily expenses add up and all added together can add up to substantial savings potential. Here are just a few examples of common everyday expenses that people spend on an average workday:
Based on twenty work days a month:
Analyze your daily spending. Cut out unnecessary expenses altogether and change habits to reduce costs of necessary expenses.
4. Your kitchen is a goldmine!
Your food budget is one of the most costly expenses. Luckily, it's also the most flexible! Cooking meals at home instead of eating out can add up to substantial savings. This is an immediate savings. Then, using smart grocery shopping skills, you can save even more by reducing the cost of groceries. This is an area where I find most people are spending two to three times as much as they need to. This doesn't mean you have to spend hours clipping and sorting coupons. Many savvy grocery shoppers never use coupons or use them only when they know they will be purchasing a particular item. Discovering the goldmine in your kitchen involves some initial research and record keeping. Like anything other talent, practice makes perfect. You'll get better and better at saving on groceries until it becomes second nature. I'll warn you, this area of saving money can become addictive. The savings are so substantial that you'll find yourself wanting to save more and more. While other budget expenses are dictated by outside sources (electric, phone, cable, etc.), this is one of the few expenses that we can have total control over and I guess that's what makes it fun!
5. Review and analyze monthly bills.
Eliminate spending on unnecessary services and reduce costs on necessary services. Study your bills. Don't know what a charge is for? Ask! Many of us pay for services we don't use or pay too much for those we find necessary. This is a common occurrence with phone bills and cable TV. Do you really need every movie channel known to mankind? Choose the best one and lose the rest. Is it essential to have every new phone feature that comes along? You'll probably find that you can live without a lot of frills just as easily as you do with them. After all, what did you do before they existed? Do your research and compare services and pricing. Don't be afraid to approach your current service companies with questions. Ask for advice on reducing the costs on their service. Make it known to them that you "need" to reduce expenses. They will be more than willing to help you rather than loose you as a customer.
6. Your clothing expenses will surely take a huge bite out of your budget pie if you're not careful.
Most people have more clothing they need to begin with. In this instance, you can not only save money, but earn money in the budget area. Sell off what you don't need or don't wear at yard sales or consignment shops. Many shop for psychological reasons, not necessity. Even if they have no intention of buying, even the best intentions can be sabotaged by shrewd marketing tactics. If you have children this is an even more expensive area of the budget. The best advice is to be a wise shopper. A little planning ahead and you'll never have to buy anything at full price. Throughout the year, stores offer clearance and closeout sales. Take advantage of them. Children present specific challenges. It seems they've grown out the clothes before you can get home and hang them up! Well, that might be an exaggeration, but I'm not far from reality here. If they don't outgrow it, it's out of fashion before it can be worn a few times. It is because of this very dilemma that thrift stores and yard sales make such good shopping centers for children's clothing. Many times, brand new clothing with store tags intact find their way onto the racks and shelves of thrift stores and into our front yard sales. Even those that have been used are usually "gently" worn. It's a great way to save money, recycle valuable resources, and many times donate to those in need (many thrift stores are owned by or support charitable organizations).
7. Include non-monthly irregular expenses in your budget.
Some examples of common non-monthly expenses are household or auto maintenance and repair, insurances, property taxes, pet veterinary expenses, medical co pays, and holidays. Estimate the value of these expenses based on past experience and plan accordingly. Break them down into monthly amounts and plan for them by setting aside funds for them in your budget. Planning for big events and major holidays, birthdays, and anniversaries reduces spending and stress. Planning is an essential part of successful budgeting. Anticipate special events and plan for them accordingly.
8. Recycle, recycle, recycle.
Never throw away what can be used for another useful purpose. As you try to bring your expenses within your income, you will find yourself becoming more and more resourceful. It's just a natural benefit of living debt free. Recycling isn't limited to your own resources. Purchasing used items, instead of new items, is also a means of recycling valuable resources. This is another area of debt free living that I sometimes find addictive. You get a great feeling of accomplishment and pride when you figure out how to substitute or create using existing resources. It like getting something for free.
9. Reduce the use of disposable items.
Whenever possible use permanent alternative to disposable items such as paper plates and cups. Minimize the use of all disposable paper products. Paper towels can be conserved by using only when you feel you cannot properly do the clean up with an washable cleaning cloth. Use cloth napkins that can be laundered instead of paper napkins. These practices not only save money but, like recycling, will help conserve valuable resources.
10. Live frugal and help others learn from your experiences.
Frugal living means having everything you need, some of what you want, and making the most of both. Conserving time, energy, and money is the frugal way.
frugal - characterized by or reflecting economy in the use of resources....economical in use or expenditure; prudently saving or sparing; not wasteful.
So in living frugal we choose to economize our resources and not waste our money, time, or energy. Frugal living is simply getting the most out of life! There is great satisfaction, honor, and happiness in doing so.
Encourage others to be financially responsible and manage credit wisely. Teach your children these lessons and the rewards of frugality. Give them the perspective to be content. No man is happy unless he is content. In a society driven today by technology and "plastic money", it may be the most important lesson they learn.
Remember, the change from spendthrift to frugal is as much in the mind as in our actions. Your perspective can play an important part in your success at debt free living. Accept that you don't have to "keep up with the Joneses" to be happy. You will accomplish more in living debt free than just financial security and independence. In living debt free you ultimately play a role in conserving our planet's resources and reducing waste in a "disposable society".
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