Remaining Debt Free for Ever
For many people becoming debt free is a situation that will never occur. In today's debt driven society it is far easier to pay with plastic and deal with the incurring interest charges than paying with cash. Families, mortgages, credit card payments and loan repayments are now seen as means to survival. But if you have managed to become debt free then this will no doubt have taken a great deal of effort and restraint, and the truth is you will be in the minority. The hardest challenge you may now face will be beginning again and remaining debt free.
Kicking the Debt Habit
Staying debt free or at least maintaining a low level of debt will require willpower and clever budgeting. If you are debt free you should have the same or more incomings but less expenditure. Making the right decisions regarding any credit or financing options is crucial to keeping debt to a minimum level.
If you have just been discharged after a long period of bankruptcy you may feel the temptation to apply for as many credit options as you can. This in itself may be difficult as lenders will be able to check your credit records and will no doubt find out about your previous status. The key thing now is to recognise your debt free status and remember how it felt to be sinking deeper and deeper into debt. Would your really want to return to the days of hiding from the phone and the debt collectors?
Don't buy what you can't Afford
In effect this means don't spend what you haven't got.Look carefully at the things you wish to purchase and ask yourself if you really need them or simply really want them. In your old debt filled life you may have splurged on items using credit cards and not given it a second until the bill arrived.
Saving or working harder to buy luxury items outright will be an incentive, and will feel better than simply sticking them on credit cards. Remember, paying by credit cards means that you are not only purchasing your goods, you are borrowing money from someone else to pay for them and then giving them extra back.
Avoid Overdrafts
Overdrafts are good for unexpected emergencies but it is all too easy to spend your entire overdraft and continually repay it from your monthly wage. Overdrafts are also an easy way to slip back into debt and find yourself in financially difficulties if you exceed your limit and are charged penalties. These penalties can rapidly escalate to the point where you are paying a large chunk of your monthly wage in charges. If you think the temptation will be too much then change to a basic bank account where there is no overdraft facility and it will be easier to track your spending.
Avoid High Interest Credit Cards
Credit cards are the number one cause of debt in Britain and should be avoided if your are trying to stay debt free. If you really need a credit card then make sure that it is a low interest one. If you need to build up you credit rating then you may be forced to take a high interest card. Only do this until you have shown you can be a responsible borrower.
Repay more than the minimum payments every month and never exceed your limit. Do not be tempted to take out one credit card to pay for another; this will definitely lead to problems. There is a reason for the term 'spiralling debts'.
Plan a Budget
Sitting down and planning a budget will help if you are beginning again after becoming debt free. Write down all of your incomings and all of your outgoings. This should include everything from utility expenses, mortgage payments and transport costs, to your daily sandwich at lunchtime. By doing this you can see exactly where your money goes and how you can minimise your outgoings. There are plenty of free budget planners available on the Internet with spreadsheets that will work out totals for you.
Savings
Try and build up some savings every month. This will not only get you in the habit of putting away money but it is also a good idea to have some rainy day money for emergencies. It is far better to pay off emergency expenses with your savings than to stick them on credit cards and pay the interest fees.
Beginning again will be a hard challenge but it will feel better when you can remind yourself you are one of the few people that are debt free. Some debts are inevitable but as long as you stay clear from extortionate interest rates and budget your money sensibly, you can be happy in the knowledge that your money is staying in your pocket rather than paying a bank executive's wages.
