For many consumers, a debt-free lifestyle is not only a dream that may seem years away from the reality. Approximately twenty percent of Americans are living a debt free lifestyle – which is free of high interest consumer and credit card debt. These consumers have planned spending habits, established savings accounts, emergency funds and save for items that they intend to purchase –- rather than financing the item with the use of a credit card.
You too can increase your wealth while adhering to a debt-free lifestyle by following these guidelines.
Save for Large Purchases
Saving for large purchases enables the consumer to truly learn the value of a dollar. It is easy enough to pull out the credit card to charge or finance purchases and takes them home immediately, but those consumers that save for the item save interest costs as well as learning valuable financial lessons. Buy now pay later plans are not very often paid in full when they are due; therefore begin to accumulate interest on a regular basis. Saving for the item allows you to earn interest while money is in a savings account, rather than being charged interest while a credit card is being used.
Stop Using Credit
Once you make the transition from using credit to debit and cash you begin to condition yourself to live within your means. When you see the balance in your bank account, you are aware that this number is concrete. You are forced to live within your means as you can no longer rely on the use of a credit card to cover the shortfalls that may come up at the end of the month before your next pay check is due.
Living a debt-free lifestyle means using credit responsibly, but for many consumers – the transition to this debt free lifestyle is began with the complete stopped use of credit. Once you begin to understand the lifestyle, smart credit use can once again be implemented.
It is not feasible to say that debt-free living is not going to come without challenges. There are going to be items that you wish you had immediately, rather than saving for — after all, there may not be room within the budget to save for these items. Beginning the debt free lifestyle is a process and will often give the consumer a wake up to call as to how much debt they may accumulate, as well as how they have been living outside of their means for so long. Once your eyes are opened to these realities, you can begin to truly experience the benefits of the debt free lifestyle.