HOW TO BE DEBT-FREE

In a world where popularity is gained by the clothes you wear, the car you drive or the house you live in, people often find themselves drowning in debts. Getting yourself into debt is like an addiction. It happens to a lot of people and it's very enticing. If you are like most who loves to spend and end up with so much debt, then don't worry, there's a cure. Although getting rid of debts is not easy, it's doable. All it takes is a lot of self-control and sacrifice.

The first thing you have to do is set yourself free from the things that tempt you to spend. A good example for this would be credit cards. For starters, you can leave these little devils at home or you can cut them up to prevent yourself from purchasing things on impulse. Remember, the more you spend on your credit cards, the more you owe. Charging purchases to your credit cards are so easy but keep in mind that it's the bank's money you're spending and you're going to have to pay them back with unbelievable interest rates.

The next thing you have to do is make a list of everything you owe, including your loans, amortizations and the money you owe family and friends. You have to come into terms with reality and accept the fact that you owe people money and do something about it. When deciding which one to pay first, prioritize those that have interest charges. When these balances are paid in full, close the account and move on. An important note to remember is rolling over your balances to another card is never a good idea, even if they offer lower interest rates. You will just end up with huge credit card debts.

The last but certainly not the least action you have to take is to make a financial plan. List down the things you spend on every month such as rent, gas, clothes and food. Track your spending habits and eliminate those you can live without. For example, if you're used to dining out every Friday night spending $25 every time then try to see if you can go out every other Friday night instead. This would save you roughly $600 in a year.

The bottom line to making yourself debt-free is to live within your means. Do not buy things just because the Joneses next door have them. And if possible, always pay in cash. Rule of thumb: if you can't afford it, then don't buy it.