3 Steps to Debt Free Living

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Debt is consuming the lives of millions of people.   Debt is what keeps us from pursuing our hopes, goals and dreams for our lives.  Debt robs us of our future.  The only way we can take control of our financial lives and our future is by becoming debt free and never going back into debt.  Debt free living must become your passion and your unrelenting goal.  Debt free living can be a reality for anyone that is willing to commit to the goal.  What if you were debt free?  How would it change your life?  What could you do or pursue if you were debt free?  Here are 3 Steps to help you become debt free.

 1.  Cut Expenses – We live in a consumer driven world.  Our spending habits are consuming our future.  We must take control of our spending habits to start moving towards achieving debt free living.  Therefore, the first step towards achieving debt free living is to cut out our unnecessary expenses.  When was the last time you reconciled every dollar you spent for the last 30 days?   When was the last time you looked at every charge on your credit card statement?   I challenge you to track every expense for a minimum of 30 days to see where all the money goes every month.  My family and I just completed this exercise.  I was blown away at how much money we wasting every month.  We were only able to identify these unnecessary expenses by tracking every dollar and keeping every receipt for a minimum of 30 days.  This simple exercise has dramatically impacted our spending habits and has freed up a lot of money.  Therefore, I challenge you to use this exercise to look for ways to reduce your unnecessary expenses and start saving money.

2.  Payoff Debt – Our debt is typically the result of the lifestyle choices we make on a daily basis.  We never stop to realize that with every swipe of the credit card we are consuming our future.  We never stop to think how much the new car, boat or other luxury items we purchase with a personal loan costs us over our lifetime.  Until one day we wake up and realize we have nothing to show for all of our hard work.  This is the reason millions of people are unable to retire and enjoy life the always dreamed of living. Therefore, nothing is more important than paying off your debt and taking control of your financial future.  We must create a plan to systematically eliminate all our debt one debt at a time.  We must commit to stop using our charge cards and only paying cash.  This will require a change in lifestyle and discipline. However, the financial freedom and rewards of debt free living will change your life forever.   It will free you up financially to pursue your hopes, goals and dreams for your life. 

3.  Cash Cushion – It is a lack of personal savings that forces us to use our credit cards or obtain personal loans to pay for the expenses we incur in our lives.   Many of these expenses are unplanned expenses for car repairs, kid’s braces, home repairs, etc.  We also use our credit cards for pay for other large expenses i.e. vacations, holiday shopping, home furnishings, etc.  These large expenses dramatically impact our overall debt, increase the costs of every purchase due to the interest we pay over time and also reduce or eliminate our ability to save money, fund retirement, etc on a monthly basis.  Therefore, we must commit to establishing and funding a cash cushion account or emergency funds account to pay cash for these expenses as opposed to charging the expenses.

A cash cushion is an emergency fund that is created to cover your living expenses for 3-6 months.  It is also used to cover unforeseen expenses, repairs, etc. that come up in everyday life.  The purpose of a cash cushion is to keep you from incurring expenses on your credit card when emergencies arise.  A cash cushion will also provide you peace of mind that you have 3-6 months living expenses in the bank at any time.   I encourage you today to set up a separate bank account and start funding your cash cushion account

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