Unfortunately, debt is a way of American life, or at least that’s what the public believes.
While a few generations ago debt was to be avoided, and people who were in debt were looked down upon, that has changed.
People can make their way out of debt, but too often, the process of getting out of debt is much like going on a crash diet.
People pay off the debt, all the while waiting until the debt is gone to quit scrimping and get back to their old way of life.
Once the debt is gone, unfortunately, it doesn’t take them long to get back into debt.
To get out of debt and stay permanently out of debt, you need to make lifestyle changes and change your mindset.
Find Like Minded Friends
Just like a recovering alcoholic usually can’t maintain his old friendships without a relapse, so, too, if you are trying to be financially responsible, you will likely have to find a new group of friends.
The new friends should be financially responsible so they can support you in your efforts to be debt free.
Recognize Your Old Way Of Life Was Not Functional
Getting calls from creditors, having maxed out credit cards, worrying how to pay the bills each month; that is not a fun situation to be in.
When you’re debt free, you’re using today’s dollars to pay for today’s expenses, not today’s dollars to pay for expenses from a year ago.
While maintaining your debt free status can be difficult, one thing that can help is recognizing that you’re quality of life is much richer without debt.
Encourage Others To Get Out Of Debt
Getting out of debt—and staying out of debt—isn’t often appreciated in our culture. People prefer to have fun now and worry about the consequences later.
Once you are out of debt, take the time to encourage and support someone else on their debt free journey. Not only will you be helping them, but you’ll also be helping yourself by practicing what you preach and staying out of debt.
Continue To Practice Frugality
Sometimes people go further into debt because they don’t consider alternatives.
For instance, when our tub backed up, I was all set to call the plumber, but my husband insisted we try to do a DIY fix via YouTube first. He was able to clear the drain, and we avoided a plumbing bill that likely would have been $100 or more.
Learning to practice frugality and find alternatives that won’t cost as much will both help you get out of debt AND stay out of debt.
Increase Your Savings
When you’re trying to get out of debt, you may want to funnel all of your money at the debt, neglecting your savings.
Now that you’re out of debt, it’s time to build up an ample savings account. Ideally, save at least six months’ of living expenses, but don’t forget to also create sinking funds.
If you have an old car, you might want to set aside $200 a month for repairs. Sure, you won’t use that money every month, but it will continue to accrue month after month, so it will be there when you need it. When you do have a car repair, you can pay cash instead of using credit.
Most people just look at getting out of debt as their goal, but that isn’t the end of the journey. Sometimes the hardest part is STAYING out of debt.
Using these strategies can help you remain debt free for the rest of your life.
Have you paid off a significant amount of debt? If so, what habits did you have to change to stay out of debt long-term?
Anthony Goff says
I have a good trick for staying out of debt – it’s called “grow up with an older brother who is constantly in debt and gets calls from creditors day and night”.
His “predicament” served as enough of a warning for me to be sure to stay far, far away from debt (especially careless consumer debt) my whole life.
Michael Richard says
Be honest with yourself.It’s easy to deceive yourself into believing that being in debt is not your fault- most of the time it is.Take responsibility for what you’ve been doing wrong, even if you’re not totally sure what that is yet.
Actually I think the most important part of this is: getting friends who aren’t in debt!
The impact of peers can be extremely powerful – it effects your attitudes as well as your behaviors. In fact, its good for all sorts of financial things, from entrepreneurism, investing, etc. Not just debt reduction.
Also, good job tacking some of the behavioral issues associated with getting out of debt. I think these are generally neglected in the personal finance blogsphere.
A lot of finance is changing your habits. For example, if you’re eating out every Saturday night, you’ll pressure your budget. So, one thing you’ll need to do is change your habits. e.g. start eating at home instead of eating out.
Peer pressure can force one to plunge into debt which is why people should understand their financial strength and stick to a manageable budget.