Credit-Free Living
You see commercials everyday about monitoring your credit score and what a good credit score should be. People are obsessed with the little number. What is that number really? In all honesty it is the number that screams "get into debt" when it's good, and "get help" when it isn't. Why pay attention to it if all you use it for is to get into debt? You can build a debt-free life without worrying about your credit score, or really even caring what it is because you never have to use it. Here are some tips to get you started:
|
|
- Save an Emergency Fund: A lot of people use credit cards (which equal debt) as their back-up or emergency fund. This can get you in a lot of trouble when it comes to paying back what you've used for your emergency. Instead of carrying a credit card for emergencies, build an emergency fund. Start by putting away enough money to equal one paycheck then build it up to at least three months worth of income if not more. This will give you a good place to go when those rainy days happen.
- Savings Plan: It is much easier to save when you have something to save toward. Once your emergency fund is up and going, you can start saving toward other things. You do not need to take out a loan to pay for a vacation, a car or even a home. You can pay cash if your savings plan has worked for you. Set some goals for yourself then work toward them. If you aren't in debt, it is fairly easy to save.
- Debit Works Better than Credit: There are certain things you can not buy without a credit card, especially if you like to shop online. However, if you have a debit card that is backed by a major credit card like Visa or Mastercard, then you're covered. Most companies will accept a debit card in place of a credit card and it does you favors by debiting you immediately for your purchase.
- Learn About Interest: Interest can work for you or against you. Learn where it will work for you then put your money there. Learn about investing. The stock market doesn't always lose money for you and some investments can really pay off. Interest working for you is basically free money, and who doesn't want more of that?
- Buy on Cash: If you are thinking of taking out a loan, think again. Buy on cash. It really doesn't take long to save up for whatever you are purchasing if you put the money you would have paid toward a loan in a savings account instead, plus you aren't going to pay double for your purchase like you would with a loan. This goes for anything you would take out a loan for including a car or a home. It is the smartest move you can make when buying a home. A person who pays a mortgage on a home often pays triple to four times what the home is worth by the time they pay off their mortgage and meanwhile they usually refinance making them pay even more. Don't get into a cycle of debt and save for what you want to purchase rather than taking out a loan for it. You'll thank yourself.
- Accelerate Your Retirement: If you aren't in debt, it makes so much sense to slam as much money as you can into your retirement fund. It will start earning for you and you'll be able to retire sooner because you are debt free and have a great nest-egg. Accelerate your retirement fund and retire sooner.
