1. Money

Choose to be Debt Free

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Many people do not know what it is like to be debt free. Many young adults start out their independence by attending college and taking out student loans to finance their education. They may, additionally, take advantage of the numerous credit cards offered to college students and may graduates with thousands of dollars in credit card debt. Once they graduate, they move onto car loans and then mortgages, never stopping to think about becoming debt free. Payments are just a way of life.

It can be revolutionary to think about living debt free. A life without payments is very different from one with payments. Debt free living means saving up for things. It means making sacrifices and resisting impulse purchases. It means planning for the bigger purchases and making sure that you are using your money for the things that matter most to you.

It also means freedom. You can quit your job if you are not happy without the worry about whether or not you will be able to keep your home or be able to make your payments. It means freedom from the weight that debt has. Debt is a big worry that is always there in the back of your mind, even if you are pretty good at ignoring it. It means that you can make your money work for you and you can begin to build wealth.

Consider the amount that you pay each month in consumer debt and what you could do with it if you were not applying it to debt payments each month. If you have $5,000.00 in credit card debt, a student loan payment and a car payment you may be paying between $300.00 to $700.00 in debt payments each month. If you had that much extra money to put towards savings or investing your wealth could really begin to grow.

People often mistakenly look at a credit as an easy way to get the things that they want now. They fail to look at the long-term consequences and costs that debt really brings. Living debt free allows you to live the kind of life that you want to live.

To become debt free you need to create a debt payment plan. First you should list your debts according to interest rate. Then you need to find extra money to apply, to your debt each month. This may mean cutting back on your expenses or taking on a second job. Then you apply all of the extra money to the first debt on your list. Once you have paid it off you move on to the next debt, applying the extra money as well as the payment amount from the first debt. You continue this until you have paid off all of the debts.

This system is also called a snowball plan because as the payments become bigger as each debt is paid off you can pay off the remaining debts much more quickly. Depending on the amount of debt that you have you may need to focus for a year or two to pay off your debts.

Once you have become debt free, you need to make the commitment to not go into debt again. This means planning and saving money for the bigger purchases. It means sticking to a budget, but all of these things are worth being debt free. It is important to remember that freedom that comes with living debt free. Do not let all of the work that it took to get there, go to waste, by taking on additional debt.

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