In recent time many people have decide to live a debt free life. Some are deciding that it might be wise to adopt a standard of living where borrowing isn’t essential. Those who are already in debt are deciding to pay off their debt as quickly as possible and not borrow again. Those without debt might decide to completely go off it. And your credit history becomes less vital if you don’t plan to use loans or financing in your life. Some may argue that, how is it possible for someone not to borrow money and live a well meaningful live. Yeah! I’m telling you categorically that, it is possible with a little creativity.
First of all, plan ahead: If you want to live without borrowing money you will need to plan ahead.
This will enable you to make your purchases without credit. So, you look to the future and create a road map to help you achieve your goals. This means that you need to have a realistic idea of what things will cost, and how long it will take you to save up for purchases.
However, financial planning for major purchases like cars land to build house or buy a home. In some cases planning ahead means opening an investment account to help you put your money to work for you.
Retirement accounts and home savings accounts can come with interest, and can be good tools to help you plan ahead for living without debt.
Other purchases, like cars, can be made fairly easily if you have modest expectations and a plan.
Preparing for emergencies is also quite helpful when you want to live without borrowing money. One of the reasons that many people end up over their heads in debt is due to the fact that an unexpected emergency can lead to the need to borrow. A good emergency fund can help you prepare for car expenses, job loss, or any unforeseen circumstance. If you work to build an emergency fund, you can protect yourself against the need to borrow later.
Protecting your assets is another means to be debt-free. Insurance can help you offset one-time costs associated with car accidents, hospital stays, and damage to your home. Life insurance ensures that your family won’t have to go into debt after you death. Consider what insurance coverage is appropriate, and get it so that you don’t have to worry about large disasters draining your funds.
Building or buying house, perhaps the biggest item that people borrow money for is a home. This is a huge purchase. You might remember a real estate agent telling you about how your home is a great investment, but it’s really a big purchase. By the time you pay interest on a mortgage (over decades), pay property taxes, spend money on maintenance and utilities, and cover other costs, there is very little chance you will break even.
If you decide that renting is the best way to live completely debt free then you won’t have to worry about saving up for a house. If, however, you want to buy a home, you will have to decide whether you want to bend your “no borrowing” rule for this one purchase or whether you want to save aggressively and get some help from an investing plan to pay for your home with cash.
By TIAMIYU ADIO ISMAIL
