Debt Consolidation – 6 Ways to Stay Debt Free

Jeanne McTaggartDebt Consolidation

Debt Consolidation

After you consolidate your debt with the help of a reputable credit counseling organization, you will be on the path to true financial freedom. Many people use debt consolidation as that changing point in their lives. Once they have paid off their credit card debt through a debt management plan, they are ready to maintain a debt-free lifestyle. You don’t have to forgo fun and entertainment. According to a recent article by cheatsheet.com, dedicated savers often commit to a spending “diet” by setting limits on how much they spend. By obtaining credit counseling you get help from insightful trained credit counselors. You can identify your weaknesses so you don’t fall back into debt again after debt consolidation. Experts with the Urban Institute say 35 percent of adults have debt in collections. A credit counselor will advise you on how to best turn your situation around, but it’s up to you to continue on the right road.

Work on a sizable savings account

According to cheatsheet.com, unexpected expenses pose a major threat to people who want to live a debt-free lifestyle. By having a large emergency fund, you won’t have to use a credit card. One trick is to reward yourself with a mini vacation or trip after you have saved up a 6 months emergency fund as well as the funds for the trip.

Pay off your balance right away

When you enroll in a debt management plan, you temporarily stop using credit cards. After paying back your debt through the plan, you will likely use credit cards again in the future. With the knowledge you have about credit scores, debt and budgeting, you will pay off your credit card transactions immediately. With online banking, consider even paying off the charge the same day. Using a credit card is a convenience when you need to reserve a hotel or rent a car, but not your go-to plan.

Buy an inexpensive car

Some experts recommend only buying a car you can afford with cash. Others say it’s fine to take out a car loan as long as it’s only for three years. If you live in an area with public transportation, crunch the numbers to see how you can save money. Share rides or “car pool.”

Consider community college

Another tip for living a debt-free lifestyle is to stretch your scholarship money for college by attending community college. Government officials say they may begin offering free community college in the future. Encourage your family to take advantage of college tax credits.

Rent if it costs less

Depending on where you live, it could cost less money to rent instead of buy a home. Instead of insisting on having your own apartment, consider renting an apartment with a friend or relative. People who are part of the tiny home movement downsize dramatically so they can lower their bills, but you don’t have to live in a 300-square foot home to spend less on housing.

Buy what you need

Buying what you need instead of what you want is another good financial habit. After consolidating your debt, you might be tempted to start spending more money. You could end up freeing up cash flow because your credit counselor will lower your interest. Instead of spending the extra money in your budget, try to stay in the money-saving mindset.

Do you want to know more about debt and how you can make smart financial decisions now that will help you secure a more prosperous financial future? Sign up for our newsletter for monthly money tips.

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