Debt can make you poor that is why you should live without debt.
The debt make you live uncomfortable. The debt collector often ask you when you settle your credit. The debt is also decrease your disposable income because you have to pay the debt first than other things. Off course it may be harm for you. You cannot save the money for future too.
To live comfortable, you have to live debt free style. Here are the debt free lifestyle:
1. Use cash
Use cash to buy food, beverages, cloth, stationery, book, and other. Using cash is cheaper than credit card. You do not have to pay the debt and interest.
2. Living frugal
Buy anything when you are really need it. Do not buy useless things such as luxurious car, luxurious things, and others. As the ordinary people, you should use simple car to go to anywhere. Either luxurious car or old car can bring you to anywhere.
People who live extravagant tend to make debt. They do not consider the income with the spending. They dare to take the debt in order to keep their life style. This kind people will bankrupt no matter how much money they have.
Budgeting may help you to live free from debt because the debt has note your income and your spending next month. The budgeting is a guidance to avoid the debt.
We can allocate some spending to various spending such as food, debt, car lease and so on. The spending should not be more than the income.
4. Do not use credit card
Credit card is a debt. You owe to the credit card company some money to buy anything. At the end of the month, the credit card company will ask you to pay the debt. The credit card is not cheap because it charge the holder high interest and some fee.
5. Emergency fund
Some people do not like to owe money but they are forced by the situation. For example, the parent should pay the surgery for his kid diseases. The surgery have not yet recorded in the budget but the parent will pay the surgery or the hospital will not allow the kid go home.
You should have emergency fund. When your income cannot pay the accidental expenses, we can use emergency fund. You do not have to find the debt from other peoples or bank.
The amount of emergency fund is about six times of your monthly spending. Surely, you can add the amount if you afraid with the accidental big expenses.
Published in: Personal Finance