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Don’t you just love the thought of debt freedom? While you are paying off your credit obligations, the urge to get out of debt is stronger than ever. You know that there is nothing sweeter than being free from everything that you owe and you long for the day that it finally happens.
While debt freedom is something that people do experience, lasting freedom unfortunately eludes them. That is because they approached debt relief with all the wrong priorities. Paying back your debt is not enough. You need to develop the right habits that will help you overcome the temptation and prepare for unforeseen circumstances that got you into so much debt.
So what habits will help you achieve lasting debt freedom?
First and foremost, you have to budget your money. This is really necessary to ease your debt relief efforts but you must be able to implement this even after you have paid off all your credits. Some people stop using their budget after the program ends. This is not a good idea. Keep on updating your budget to suit your current financial capabilities and requirements. You have to make sure that it is realistic so that staying within budget will not be impossible. Avoid making drastic cuts on your spending if you know that you cannot live without these expenses. More importantly, develop the habit of following your budget. A well constructed budget is for nothing if you cannot follow it.
If you use your budget correctly, you will learn how to live within your means. This is another habit that will give you lasting relief from debt. By keeping your spending lower than what you earn, the chances of acquiring unnecessary debt will not be possible.
There are many ways to achieve this. One of them is to be a wise spender. This is where the difficulty lies as temptation is very strong once you are out there. It is impossible for you not to buy clothes or food because you need these things. However, you need to develop the habit of choosing what you spend on. Think about every purchase carefully and always list what you really need before you go out to the grocery or mall. Stick to your list and choose the most economical product while staying true to quality products.
Stop using your credit cards and learn how to pay for things in cash. This is another method that can effectively help you live within your means. If you cannot pay for something in cash, do not buy it. If you really want to use your card for reward points, put aside the cash so you can pay the bill immediately as it comes.
Lastly, you need to learn how to save. This is your financial security for the future. Remember that accidents can happen. We cannot control the future that we can prepare for any circumstance that would have led to another debt. Prepare for these incidents by growing your emergency fund. Ideally, you need to have enough to help tide over the family for 8 months to a year. In case something happens to compromise your income, you will not be left with nothing.