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Jan 28

6 Powerful Ways to Stay Out of Debt

stay out of debt

There’s peace of mind and happiness when you’re debt-free,

“Act your wage.”
― Dave Ramsey

Stay out of debt.

That’s what always tell myself nowadays and the same reason why I love listening to Dave Ramsey’s radio show where he gives advice to callers on how to be financially responsible, how to get out of debt and stay out of debt (though sometimes he can really be harsh!).  My favorite of the show though, is the part when one of his listeners comes or calls for the “debt-free scream”.

For those of you who hadn’t had the chance to listen to any of the episodes, the debt-free scream is actually what it says it is.  It’s when listeners shout on the top of their lungs that they already are debt-free (cue the sound clip from the movie Braveheart where Mel Gibson yelled FREEDOMMMMM!!!).

No kidding, both play simultaneously and it’s just plain awesome!

Before the listener does his or her debt-free scream though, Dave conducts a small interview to understand the background.  He asks them how much they were able to pay for how many years and the stories that have been told in my years of listening has been nothing but inspirational.

Some were able to pay off more than $100,000 in less than 5 years and you will be surprised how people do this when Dave asks them how’d they do it.  They don’t go on vacation for years or stop eating at expensive restaurants for a long time, it’s crazy!

Hearing these stories also made me realize how much we can achieve if we are really driven and determined in reaching our goals.  These people decided they want to be debt-free and they really did everything that’s necessary to make that goal.

Can you honestly stop yourself from going on vacation for at least a year or keep yourself from eating steak for as long as you can?  It’s going to be difficult but definitely not impossible as these people proved.

The subject of being debt-free or anything to do with debt interests me a lot because in 2013, I almost gave up all hope because of the amount of debt we got ourselves into.  I thought it was insurmountable and hopeless to even entertain the thought that I can get out of the mess I created for my family which is why I got hooked into listening to Dave Ramsey.

Well guess what?  Two years after going broke, we have now managed to slash our debt in half and we’re better off now.  It’s not as worse as before when we had no savings in the bank, buried in debt for four of our credit cards and living from paycheck-to-paycheck.

How did I do it?

Like I mentioned above, if you really want something, you’ll do everything to get it.  Here are some of the ways you can:

 

1. Stay out of debt by learning from your mistakes

 

We get into debt not because of the economy or the weekend sales the biggest malls near you holds every payday.  We get into debt because of our own fault and sometimes it really takes a rude awakening before we realize what the hell we’ve done.  It’s like waking up with a hangover and wondering why your head hurts when you already know the answer.

We all make mistakes so don’t beat yourself up.  What’s important is to be able to move past these mistakes and learn from them.  If you really want to stay out of debt, look back at some of the poor decisions you’ve made when it comes to money and make sure never to repeat them again.  Take responsibility.

2. Be cautious and practice restraint

So you walked in to the mall and the first thing you see is that big sign saying:

WEEKEND SALE, MORE THAN 50% OFF

Your eyes grew wide open so you went straight to the appliance section where you see that 55-inch smart TV you’ve been stalking for the past few months.  There’s a 20% discount!

You already have a 40-inch LED TV in your living room but “it wasn’t smart enough” and didn’t have the feel of a movie screen so what do you do?  You pull out your credit card and tell yourself what the hell, I’ll do it in installment so it’s manageable.

Sounds familiar?  Well, these are just some of the few case where the TV is way smarter than the buyer.  We need to be more disciplined when it comes to spending.  We need to stop being impulsive because this is what gets us into trouble.

If you want to stay out of debt, before you buy something, think twice, or thrice for that matter.  Ask yourself the following:

“Do we really need this now?”

“Can’t we live without this?”

“Will this be worth the penny?”

If you hesitate for a single second in answering any of the questions above, don’t buy it.  There’s a better time for it.  It’s better to sacrifice the momentary pleasure you can gain from that new toy than sacrifice your happiness and peace of mind when you look at your credit card bill scratching your head while asking, “what the hell was I thinking?”

 

3. Stop comparing yourself to others

 

Just because your neighbor Ted got himself a new car doesn’t mean you have to get one yourself.  Just because your colleague Jenny got herself the newest iPhone doesn’t mean you have to upgrade yours.

But we all succumb to envy most of the time don’t we?  We just can’t help it to see our friends make more than we have so much so that it affects our ability to think clearly and we end up getting stupid with our spending decisions.

We all have our own net worth and it’s just a fact of life that some people earns more than we do that they can afford to spend more than we do too.  If you really want to stay out of debt, you need to accept this reality as early as possible so you won’t end up wondering where all your money went.

 

4. Live within your means

 

“Rich people live as if they’re broke while poor people live as if they’re rich.”

As parents, we only want the best for our kids but sometimes, we use this same reason to justify our poor sending habits.

Why would you send your kid to a private school you can barely afford?

Why would you book round trip tickets for the whole family to Hongkong when you barely have savings?

Prioritize the things your need over those that you only “want”.  You have to pick a lifestyle that not only suits your taste, but also your budget.

If you can’t afford it, don’t buy it or suffer the consequences later.

 

5. Don’t be slave to your credit cards

 

Financial gurus would often advice us to get rid of our credit cards and to strictly stick to cash and I totally agree with this principle but I also believe that having one, JUST ONE, for emergency purposes, wouldn’t hurt.

The problem begins when we start getting addicted to it.  Why won’t you be, you don’t even have to have the money to buy something, you just scratch the card and never care what happens next.

Stop being an idiot by spending money you don’t have.  Be more disciplined when it comes to credit card use. Pay the actual amount due as much as you can instead of paying for the minimum amount because if you continue to do so, in one year, you will be surprised to know that you can no longer afford to pay the finance charges that has piled up.

Use cash as much as you can and use your credit card as a last result.  It’s not bad to use credit cards as long as you can use them responsibly.

 

6. Save first then spend what’s left.  Not in the other way around

 

I can identify with this so much because I used to do it the other way around.  Two years ago, we would spend our salaries with the usual expenditures like grocery, gas, or eating out and just consider saving what’s left before the next pay day and this was ABSOLUTELY the wrong way of doing it.

If you want to stay out of debt you have to prioritize saving.  As soon as you receive your pay, separate a certain amount and put it in your savings account then do everything you can to make what’s left fit within your budget and it doesn’t have to be that big of an amount.

If your budget is really tight, just set aside a thousand or two every pay day and in a year’s time, you’ll have 24,000 already and you didn’t even notice.

 

Over to You

 

Getting out of debt is difficult but staying out of it is a lot harder.  You got to have the discipline and the determination to avoid getting into situations that will be difficult to get out from.  Be thrifty and live modestly. Only buy the things you need and that you’ll benefit from.

It’s better to sacrifice a little now and gain more in the future than having a good time and ending up in regret later.

Have you been into so much debt?

How much was it?

How did you get out of it?

I would really love to know so feel free to leave a comment, share your stories and tips to our readers so we can help them.

 

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Noel Rosos

About Noel Rosos

Noel is a husband, father, author, performance coach and self-proclaimed FAILUROLOGIST who helps business owners and struggling individuals convert their failures into opportunities through inspiring blog posts, life-changing books and exceptional one-on-one coaching sessions

4 comments

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  1. bolaaka

    Saving first before spending is a brilliant piece of advise.

    1. Noel Rosos
      Noel Rosos

      Thanks Bola! Appreciate it!

  2. awazieikechi

    Hi Noel

    What an excellent post about being debt free. We really need these tips to get rid of the rat race of finance.

    I agree that we should adopt saving and spend within our means. Thanks for sharing. Take Care

    1. Noel Rosos
      Noel Rosos

      Thanks Ikechi! Always a pleasure to have you here!

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