Debt Free Frugally
At one time or another, we all experience the need to borrow money. We needed it, or we thought we needed it. Either way, it turned out okay in most cases. You paid the debt off, and you were debt free again.
Some people get trapped in the debt cycle. At first, it doesn’t seem like much, but as time goes on, they acquire more and more debt until one day, they discover they have a significant financial problem.
They are making minimum payments and acquiring more debt.
The upside is they and almost everyone can be debt free frugally.
If you adopt a frugal lifestyle, you will become debt free because frugal living is about making the most of what you have and reducing your cost of living.
There are benefits to frugal living one is avoiding lifestyle inflation. Another advantage of being frugal is it’s a great stress reducer because being frugal reduces financial stress. You worry about money less.
Debt Free Frugally
To live frugally, you will need a budget and a spending journal. The budget assigns a certain amount of money to the different categories you have in your life: housing, eating, clothes, and much more. The spending journal is to track your spending. It’s a kind of checks and balances.
In your budget, you need to list each debt individually. Because after you have your budget set up, you will start paying off the debt one at a time, beginning with the one with the smallest balance. You will start with the smallest balance because you will begin to free up money faster than if you start with the debt that charges the most interest or the largest balance.
To become debt free, you will need to commit to certain things.
Stop using Credit.
Commit to using no credit. If you don’t have the money, don’t buy it.
This may sound harsh, but most debt is for wants, not needs. If you want it badly enough, you can come back for it when you can afford it. For now, you are trying to become debt free frugally.
Pay Off The Debt With The Smallest Balance First
There is some controversy about what should be paid off first. Some say you should pay off the loan with the largest interest rate, some pay off the loan with the largest balance first, and others pay off the loan with the smallest balance first.
I suggest paying the loan with the smallest balance first. By doing this, you’ll free up money faster. If you don’t have money in an emergency account, this is the perfect time to start one.
Or you can pursue paying off the next smallest debt.
If You Don’t Have An Emergency Fund, Start One
We know it will happen, but when and how much will it cost?
I’m talking about emergencies. We need to be ready, and I know you are trying to get out of debt. But if you are working on getting out of debt, protect yourself from going into debt again.
Usually, an emergency account of a couple of thousand dollars will cover most emergencies.
If you have an emergency fund, continue paying off the next smallest debt.
Do this until you are debt free.
If You Can’t Afford Your Rent/Mortgage Move
Most people don’t want to hear this, but if you can’t afford to live where you live, move.
If you are trying to become debt free, you need to give yourself every chance to be successful as you can.
In the beginning, it may be a little difficult but remember this. If that’s such a great place, you can return after you are debt free.
Live Frugally So You Can Payoff Debt Faster
As you work and rework your budget, look for places you can trim some extra money to apply to being debt free. By being frugal, you will be able to become debt free frugally.
The sooner you are debt free, the better.
Conclusion
If you are trying to become debt free, you must commit to a few simple rules. Stop using Credit, pay off the smallest balance first, start an emergency fund, and move if your rent/mortgage overwhelms your finances.
This is how you can be debt free frugally.