When people find out that I’m debt free, the thing they most want to know is how it’s possible and how they can achieve it, too. Quickly. They want the crash course or the quick fix to debt free living. I tell them that there really is no quick fix. There’s no magic pill that can suddenly make you debt free. If you’re already debt free, you know that you have to constantly watch your spending and make sacrifices and smart choices to stay that way. If you’ve got debt, you know how hard it can be to pay it down and finally get ahead. It’s not easy and it’s not quick. Debt free is a way of living that evolves over many years of debt free choices and actions.
That said, there are some things that have made living debt free possible for me. I’ve talked about some of them in this column before. They are choices and actions that might have led me into debt had I done things differently. It’s not a quick fix, but I share with you the top ten actions and decisions that I’ve made that have kept me debt free.
We bought a small, easily affordable house: We bought a house that was affordable on just one of our salaries, saved up a large down payment, and paid the remaining small mortgage off quickly. By doing this we’ve avoided a house payment for many years and been able to bank that money. When you buy a house that stretches you financially just to make the payments, it leaves you much less money for saving and dealing with life’s emergencies.
We pay for cars with cash: We’ve never had a car payment. We’ve always bought what we could afford to pay for with cash. We save for our cars. It’s meant that we haven’t always had the prettiest, newest cars, but we’ve had reliable transportation and we haven’t had to tie up our money with a payment.
We bank raises: Whenever we’ve gotten pay increases at work, we’ve upgraded our lifestyle a little bit, but banked the rest. We’ve never matched our lifestyle to our salaries. This gives us much more money to save, invest, and use to pay cash for large purchases.
We have an emergency fund: No matter how little money we made, we always saved something, even if it was only $10 per paycheck. By always saving we created an emergency fund that keeps us from having to pull out the credit cards when someone gets laid off, has a medical problem, or when something breaks.
We bought an affordable house Part 2: Besides the mortgage, owning a smaller home has meant that we’ve paid much less in insurance, taxes, and utility bills. Too many people not only stretch to make the mortgage payment, but also have to stretch to cover all of the other expenses associated with home ownership, leaving them with no choice but to incur debt to cover other expenses.
We do not shop recreationally: We have a lot of hobbies and shopping isn’t one of them. When we need entertainment, we don’t head to the mall. It helps that neither of us likes to shop all that much in the first place, but by not going to the stores unless we need something, we’ve been able to keep our spending low and avoid impulse purchases.
We use things until they die: We don’t upgrade and replace TV’s, appliances, clothes, cars, or anything else just because we’d like something newer. We use everything until it dies and then we fix it if possible until it can no longer be fixed. Only then do we buy something new. We don’t have the latest and greatest of anything, but by delaying purchases until they are necessary we give ourselves much more time to save for replacements and avoid debt.
We keep monthly bills to a minimum: We don’t sign up for a lot of subscriptions and things that result in a lot of monthly bills. Cell phones are prepaid and for emergencies only, we don’t have cable, we don’t subscribe to any websites for additional content, our Internet is “slow” high speed, our landline phone doesn’t have any extras like call waiting, and we limit magazine subscriptions. We conserve electricity and water like crazy to keep those bills as low as possible, too. Keeping our obligations low, getting only what we need, and foregoing expensive add-ons means that we have far less money going out every month.
We never pay retail: It is very rare for us to pay retail for anything and this has resulted in substantial savings over the years. We use coupons, wait for sales, haggle when appropriate, buy used when we can, and comparison shop to get the best price. If we can’t get a price we’re happy with, we walk away. We do this for everything from food to travel. It may seem silly to strive to get the best price on every little thing, but every penny saved is one more for the savings accounts.
We don’t care what other people think: This is perhaps the single biggest thing that keeps us debt free. We simply don’t care what people think about our lifestyle and our choices. We don’t care if people think we have ugly cars or that we don’t wear the trendiest clothes. It doesn’t matter if people think we’re strange because we use coupons or because we don’t go out every weekend. What we own is clean, well kept, and paid for and that’s all that matters to us. Because we don’t care, we’re not constantly in a spending race with others to outdo them and to keep up with trends.
There are many other things that we do to cut spending and save money, but these are the ten that have made the biggest difference to us. If there is a “crash course” to debt free living, this is it.