Being debt free is great, but be careful or it won’t last!
My wife and I paid off our last debt, a student loan, just over 2 years ago. It was such a freeing feeling to finally be debt free (except for the house) and we vowed to never go in debt again.
The problem is, debt is so easy.
While were in a Financial Peace University class recently one of the things the class leaders did was have everyone bring in all the offers of credit that they received in the mail, and see how much credit we could potentially open. The 7 couples in the class were sent credit card and other loan offers in excess of 1 million dollars – all within a few weeks!
Credit card companies and banks want to give you credit, and want you to be in debt. It’s how they make their money. Because of that it is easier than ever to go into the red.
7 things you can’t do if you want to be debt free
You constantly need to be on guard because if you aren’t, you can quickly find yourself back in debt.
Here are 7 things you can’t do, or continue doing, if you want to stay out of debt.
- You can’t spend more than you make! If you need to, cut back on expenses, or increase your income.
- You can’t keep moving forward without a plan. Set up a zero-based budget, and give every dollar a job! Know where your money is going, how much you need to save, and how much you’re going to spend on every category.
- You can’t continue buying on a credit. Save up for big ticket items instead, you’ll be glad you did, and it’s more rewarding. Just plan on those big expenses, and make them a line item in your budget. Sometimes you’ll find by the time you save the money you don’t want or need the item anymore!
- You can’t constantly buy the new things just because they’re new. The lure of the newest Iphone or digital SLR camera can be so tempting. But if you already have an old MP3 player or a point and shoot digital camera, make do with what you have. Hey, it still works! That new thing will be old again in a few months anyway!
- You can’t try to keep up with the Joneses. Things can’t make you happy, and trying to buy status with things won’t work. Wow them with your ability to save, not your new Escalade!
- You can’t use credit when you have the cash. Sometimes it can feel nice to buy something on credit thinking that you’ll pay it off within a paycheck or two because you’ll have more of a cushion then. The truth is that credit card debt often starts off small, and builds from situations like these. If you can’t pay it off comfortably with cash right away, don’t buy it!
- You can’t depend on a credit card for emergencies. Instead, save up an emergency fund of 3-6 months of expenses for those inevitable “emergencies” that always have a way of cropping up at the worst possible times.
Those are just a few things that you can avoid doing if you are serious about getting out of and staying out of debt. While it’s not an exhaustive list, it’s a good start.
What are some things that you are avoiding in order to stay debt free?
I nominated you for the ‘Pay It Forward’ award for PF Bloggers on my site. Thanks for all the great articles and good advice!
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Thanks for this great post! I especially like #4 and #5. Sometimes it’s hard to look around at what “cool” things are out there and not want them too.
Mirandas last blog post..Don’t Like the Currency? Make Your Own
Fantastic post with some great points. I think that #4, #5 and #7 are the most relevant and maybe even the most important. Especially #7 – I can’t emphasize how important I think it is to have an emergency fund built up. I’ve talked about it several times on my blog and I may just be talking about it again soon!
Llama Money says
#4 sure rings true. I love new stuff, especially if it beeps and/or lights up. Anything electronic is tough for me to resist. But I’m learning to say that what I have today is good enough. Tough process, but I’m getting there.
Llama Moneys last blog post..Down down down
Mo Money says
This is a great post! Might be a good list to look at before you go out to buy that next item.
Yeah , its very easy to fallback on old ways once you accomplish your goals. Goes with any goal in life
David L. Brown says
It feels great when you are living “Debt Free”, so if you don’t want to live “Debt Free”, then you could choose to get back in that rut again…
Finance companies will be happy to see that you are still wanting to have them charge you financial charges/fees, late fees, over-the-limit fees, and anyother fees that they can, so if you want to go back into debt…hey, it is your choice. I am living “Debt Free”, educated about the games that the banks and loan companies and credit card companies will play on anyone who hasn’t got updated, ie; on the games that they play, which means that they the credit card companies, banks, loan companies and anyothers that are out there trying to get their “Hooks” into your wallet, will always be able to separate whatever amount of your money per month from you…Do you real want to pay them a Fiancial Charge, just so that you can use their money and then end up in a Financial Hole…It is not worth it to be in Debt…You choose, and when you do, don’t complain about your finacial problems and how you are struggling, and you say that you never ever have any money, because you are having to pay those credit cards, bank loans, or financial companies that allow you to have a signature loan…Yea Right…They need you, but do you need them…If you let Debt control your life, then you are truly the slave to your addiction/money…You can be a slave to your pay check, or you can put your pay check to work for you, in stead of it being the other way around…
Before you head back into a Finacial Hole, stop and give yourself a Reality Check, Cash can not get a Financial Charge placed on it, but a Plastic Credit card can…I use cash, and if I don’t have money in hand to pay for my purchase, I do without, People need to learn to be real and not be dumb with regards to how they handle their pay check…If you can spend money, you can save money…If you choose not to save for those events that come up…then you should not right to go to anyone in your family or friends and ask for Finacial Money to help you get through the issue…You deserve the issue, because you chose to do nothing to save for it…So deal with it,…
Cathy Ferguson says
I think you should spend some of your money on an education. Basic English grammar would be a good place to start.
Clair Schwan says
Another important thing you can’t do is “turn a blind eye” to where you are and where you are heading. This is closely related to items 1, 2 and 3 on the list.
If you are in a hole, you need to know this. If you are getting yourself into a deep hole, this is a trend you need to recognize.
You can always spend more than you make for a little while, and make up for it in the longer term, but for many people the time to make up for it never arrives because they aren’t realistic about where they are or where they are heading.
It’s like the guy who falls from the 10 story building and says something to each person standing near a window that he passes as he gains speed heading toward the ground. Each person he passes is told “I’m okay so far” and of course it’s perfectly true until he makes a sudden stop at the end of his freefall.
Dana @ Letters to Elijah says
We are trying to get control of our grocery budget… which means limit eating out!
Dana @ Letters to Elijahs last blog post..Dear Elijah
Francois Viljoen says
Wow. I never thought about that – watch out for getting back into debt.
I think the best point you have is that you should have a financial plan – for after you’re out of debt.
No plan, no reason to save or live within your means…
Francois Viljoens last blog post..Wisdom Strawberry #1: It’s there for the taking
BEVERLEY Whittingham says
Good Morning this 7things you speak about to take control of you life and my fininaces these step is Interesting coment need to put in my Subconscious mind and live it And let it work for me I will try to Control my Spending and work with the principle and let my life Come in Order .thank You for you Help