If there is one way you can almost guarantee to have a life free of stress it is to have a debt-free life. However, there is ‘good’ debt, and ‘bad’ debt and the trick is to know the difference between the two, and avoid the latter. So, how do you go about avoiding bad debt? Here are our five top tips for living a debt-free life.
#1: Know the Difference Between Good and Bad Debt
Good debt is the debt you take on in order for it to be a good investment. The most obvious form of good debt is a mortgage. Unless things go seriously bottom-up, investing in property is always a good idea. Another form of debt that may be good debt, is a car loan. If you need a car for your work and can’t afford to pay cash for one, then a car loan would be good debt; although, paying in cash for a car is generally a better idea if it’s possible.
#2: Get Rid of All Your Credit Cards
In a perfect world, you should not have any credit cards. The interest rates are very steep and they are far too tempting to use to buy things you don’t really need. If you do have credit cards because you need them for grocery shopping online, for example, then get rid of all but one of them. Pay off all the others and then make sure you pay off the one you have at the end of each month.
#3: Only Buy Things You Can Pay for in Cash
This is such an easy way to stay out of debt but in this world of instant gratification, almost no one does it. Make this simple rule for yourself and keep to it: if you don’t have the cash, don’t buy it. Yes, this rule might seem easier said than done, but ultimately, it would mean far fewer people would be drowning in debt if this rule was applied more often.
#4: Cut down on Your Spending
This is another very simple way to remain debt-free: stop spending money on unnecessary luxuries. You may have to be a bit tough on yourself here but if you’re not managing to make ends meet, then the short term pain of canceling cable TV and cutting back on that clothes shopping habit, will certainly be worth the long term gain.
#5: Seek Some Professional Help
If you feel that you really can’t cope with the debt you have, then you should seek some expert guidance. This can be a hard step to take and you may be tempted to go it alone rather than talk to anyone else about it, but by doing this you are disadvantaging yourself. Not only do you need someone who knows all the ins and outs of negotiating debt repayments but you also need someone who knows how the banks, loan companies, and credit card companies work, so they can get the best deal for you. Specialist debt lawyers such as https://www.mccarthylawyer.com/ are experts when it comes to getting out of stressful debt situations. They are not there to make you feel bad, but to help you, so don’t put off seeking help for the sake of embarrassment.
If you think that you have debt problems, you have three courses of action. Ignore everything and hope your problems go away; try and tackle the problem yourself; or get in contact with a professional. The first one only leads to a bigger problem further down the line. The second one can be more than some people are able to manage on their own. So, if you find yourself unable to manage your debt effectively on your own, then speak to someone who can help you identify the best way forward. Never suffer in silence.