Reaching financial freedom is far from easy. Only 29% of Americans consider themselves to be financially healthy. Once you obtain debt freedom, you want to be able to stay there. So, there are several things you’ll want to avoid to live debt-free.
1. Budgeting is Always Crucial to Your Financial Health
You had to budget to get out of debt. That doesn’t stop just because you no longer have creditors to pay off. In fact, budgeting is even more important once you’ve paid everything off. If you don’t set a budget you run the risk of racking up debt again if an emergency arises.
Remember that your budget needs to be 100% cash. Don’t consider your credit cards or any other form of money spendable.
2. Overspending is a No-No If You Want to Live Debt-Free
That directly ties into overspending. If you start considering the money available on credit lines to be spendable, it is more likely you’ll restart the cycle of debt in your life. You certainly don’t want that after all of your hard work to get where you are.
Instead, plan for bigger purchases and save up for what you want. You should also have a set budget for recurring expenses and other plans. Don’t deviate from that budget.
3. Don’t Stop Saving Your Money
Saving money isn’t just important during your debt freedom journey either. As mentioned in the point above, it is important to save money for large purchases and planned expenses. However, it is also always a good idea to keep money saved.
Having an emergency savings fund will keep you from tapping into credit lines if something comes up. Additionally, saving money can help you secure your financial future and ensure you’ll be able to retire someday.
4. Giving Up on Investing Isn’t an Option
When it comes to saving for retirement, you should also continue to invest while you live debt-free. Even though you may not have as much cash flow or you may be tempted to spend cash, it is a good idea to invest in a diversified portfolio.
Not only will this allow for you to have financial freedom throughout the rest of your life but it can help you expand your current finances. Avoid being afraid of the stock market once you’ve paid off your debts.
5. Neglecting Insurance Will Cost You
Renter’s insurance, homeowners insurance, car insurance, and health insurance. Purchasing coverage is important to protect your finances. In the event of an accident or emergency, these policies can help you avoid racking up debt.
Even though the monthly cost of insurance may seem like a pain, it can help you replace damaged items, restore your health, and protect your belongings. Without it, it is easy to swipe your credit card. Insurance is crucial if you want to live debt-free.
Readers, what else would you add to the list? How do you live debt-free?