How To Live Without Borrowing Money

A few short years ago, consumers had a very different outlook on debt and personal finance. After decades of excessive consumerism, many people grew accustomed to living in debt. Unlike previous generations who had a real understanding of saving money and avoiding debt, a noticeable shift away from a more frugal lifestyle evolved. Of course, the recession has taught us several important lessons regarding personal finance, one of which is the need to reduce or eliminate debt. Here we look at how you can pay off existing debt and move forward without having to borrow money in the future.

Before you can embrace a life without more debt, you have to pay off any debts you currently owe. Depending on the type of debts you owe and the amount, this could take as little as a few weeks or as long as several years. The key is taking inventory of any debts you currently owe and developing a plan to pay off these debts in as short a period of time as possible.

Living free of debt may require sacrifice on your part. This is especially true for those who have become accustomed to a lifestyle that exceeds their income level. Living beyond your means is the easiest way to get in debt, therefore any chance of living without having to borrow money from one source or another will require lifestyle changes that reflect your income.

If you truly want to avoid borrowing money for the rest of your life, you will have to be serious about saving money from this point forward. Not only will you need money to live off of today and tomorrow but also have money set aside for emergencies and big ticket items in the future. A life without debt requires an individual to have both short and long terms goals which allow the person to save money in advance for major purchases in the future. Learn as much as possible about different savings and investment vehicles to get the most bang for your buck.

Just because you want to live debt free doesn’t mean you have to eliminate any chance of qualifying for credit in the future. Consider the ramifications of living a cash only life, one of which is the absence of credit history. If for any reason you find yourself needing to apply for credit at some point in the future, you may not qualify if you have successfully eliminated any history of credit. It is possible to maintain a good credit score and history without going into debt. This is an important element of personal finance that should not be overlooked in your quest to live without borrowing money.

There are some things that require the use of a credit card. For example, traveling without a credit card could be next to impossible. You need to book hotel rooms, rent cars and reserve airline tickets. Although not all debit cards are accepted in lieu of credit cards, you will find life is much easier if you have a debit card for many of these situations. Debit cards will offer many of the same conveniences of a credit card without owing anyone a balance when it is all said and done.

It is not impossible to live without borrowing money, however it does require a certain level of discipline and patience that is not common in our fast paced society. Understand that you can manage your money in a way that supports your lifestyle if that lifestyle is within your budget. To do this, many changes will have to take place and a new approach given to money management.

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