Spend Less To Be Debt Free
If you’re looking for a way to live a debt-free life, then there’s a really simple mantra to follow. Spend less than you earn. Of course, it’s not always easy to do this, but wherever you are in life, if you adopt this mantra, you will gradually work your way out of financial difficulty and start being able to put money aside for a rainy day or something fun.
It helps, of course, if you’re earning in the first place. Taking that as our starting point, you need to first come up with a household budget. You can do this on a spread sheet or on a piece of paper. At its simplest level, you’ll have two columns – the money coming into the house and the expenses that you have as a family.
Try not to forget anything on your household budget. Do you have a grown up son or daughter who contributes to the household income, for example? If they’re earning and not contributing and you find it hard to make ends meet, then maybe it’s time they did.
Include all your regular bills – mortgage, gas, electricity, telecoms and household taxes, as well as your monthly spend on groceries, entertainment and trips.
Once you’ve got a clear picture of what is being spent where, and you see you are spending more than you earn, look for where you can make savings. They don’t have to be huge to be significant. If you can reduce your electricity and gas bills by only a few dollars a month, it’s worth switching supplier. The same goes for your phone line and internet.
Think about switching supermarket chain, and buying from the basic ranges to reduce your groceries bill.
Then there are the luxuries. It may be that you pay for a gym membership. If that’s pushing your budget, give it up, and go walking or running instead. Similarly, limit your nights out or trips to the movies until you are spending less than you earn.
It Adds Up
All these small gestures will add up, and mean that you are more likely to stay in credit. You’ll still have times when you need to dip into your overdraft, for those unexpected expenses like a car repair or a new washing machine. But if you can work to create a surplus each month, then those unexpected costs shouldn’t have such a negative impact when they come around.
Of course, if you already have significant debts, it may be that you need to go further and set up a debt management plan to get you clear of that debt, but the mantra will still hold true. Spend less than you earn and you’ll eventually get ahead.