6 steps to destroy debt and keep your lifestyle intact

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This is a guest post from Andy Masaki, who blogs at PennyLessDad


Before showing you directly, how you can pay off debts without changing your lifestyle, let me ask you a couple of questions first!

What is a lifestyle?
What is debt?

erasing word debt
Can you establish any connection between these two words? Lifestyle and Debt?

Your lifestyle is made up of your habits, style, the way you think, your fashion and your character.
So how come debt is related to your lifestyle?

To be frank, people fall in debt because they have a habit of borrowing money, whenever they can’t afford anything they want!

I know that’s harsh, but the above line explains how debt is related to your habits, and therefore to your lifestyle.

Then is it really possible to clear debts without sacrificing your happy-go lifestyle?

Actually yes! It is possible to lead a debt free life by following these best options for becoming debt-free.
You just have to mend a couple of your bad money habits. The rest you leave it on time and hard work, and see those debts fly away!

Follow these steps to destroy your debt and keep lifestyle intact:

Step 1: Figure out your income and the lifestyle you lead.

Forget credit cards and loans for the time being.
Determine whether or not your income alone can withstand the pressure of your spending habits!
If yes then you can jump to, Step 2, else you will have to figure out how to manipulate your lifestyle.
Sit down and look for the places where your expenses go out of hand.

Do you spend too much on electronics? Do you use your credit cards quite often? Or have you blocked your money by buying too many insurance policies?

You see, only you can help yourself out in searching your financial loopholes!

Step 2: Start knowing your debts “terms”!

How much debt you have in total?
What type of debts you have?
Which one carries the highest interest rate?
Which one is difficult to fight?
Which credit card has the lowest amount and can be easily dealt with?

Get an estimate of the monthly payments you can afford to make, and how long it will take to clear your debts to become debt free.
You should also see how much you can save on your debt payments!

Now, look out for ways to become debt free that you find the best!

Debt settlement will definitely help you save more money, but negotiating with the creditors might be hard so you need advice and professional help.

On the other hand Debt consolidation will help you clear your debts in an organized manner, by bringing all your debts into one place at a lowered interest rate.

Whereas with credit cards you can surely go for a balance transfer method.

So, once you have figured out what monthly payment you will make, it’s time to create a budget!

Step 3: Create a budget that helps you keep your lifestyle intact:

People who are ready to sacrifice their lifestyle for clearing debts will straightaway start budgeting by giving debts and savings the first priority.

But I will go easy on you!
Create a budget. Best will be following zero-based budgeting, and this is how it works.

Make a list of all your expenses as per their importance.
The most important expenditure must be at the top of your list, and the least important one at the bottom.
In your case, the monthly payment for your debts will be the first priority, then go on listing your expenses accordingly.

Now add up all your expenses and subtract it from your salary amount.
If there’s anything left, then forcefully assign every single dollar a purpose. Say you can use this amount to make extra payments for your debts.
Or you can even stash this money into your savings account!

BTW, professional debt free solutions, will provide you with a budget that tallies well with your lifestyle.

You might find that the customized professional budget suits you the best and  you may not need another personal budget. But believe it or not zero based budget is the basis of all professional budgets. No matter whatever budget you receive the professionals will always use the algorithm of Zero Based Budget!

Step 4: Try to earn extra:

If you can manage a second job, then you will have more money to experiment with.
You can also clear off your debts faster and still be able to retain your present lifestyle.

You can even sell unwanted goods lying in your house for a long time. Better even if you ask for a salary raise!

Step 5: As your debts get lowered expand your savings:

When your debts get lowered, you free up more space for savings.
So be wise and start to follow the zero-based reverse budget, just like in step 3, and list savings as your topmost priority.

This way you will have a good amount saved for emergency and future expenses!
More savings means more financial freedom, and more financial power to fight future debts!

Step 6: Take measures not to incur more debt:

This doesn’t mean you have to be frugal.
It is just being sensible and learning lessons from your past and not making haphazard expensive decisions!

You will be working so hard, not to be debt – free only for a couple of years, but for your whole life.

Therefore in future try to maintain a good credit score, and never ever rely on payday loans!

In this post, I haven’t discussed medical debts, because of those fall under emergency and unexpected expenses. Your savings will help you a lot in tackling this kind of debts!

That’s all.
As an ending note, I would say don’t worry too much about debts. Because if not debts, stress can seriously ruin your life!
Take care and I wish you good luck with your debt dribbling!

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