The guide to living debt-free

If you never want to be in a situation where you are forced to borrow money, here is what you need to do right now

09:20 20 September 2013

Borrowing money should be the last resort for any person who wants to live a debt-free life. However, that is seldom the case for most of us, primarily because we don't have a plan backing us. There are nevertheless many ways to make sure that unexpected payments don't force you to become indebted, and most of these ways will eventually lead to a debt-free lifestyle. Here are the most important aspects that you need to take into consideration:

• Always think in advance. Even if you are under no financial pressure right now, things may take a turn for the worse any time. This is why, if you want to live debt-free, you have to start saving money while you still have no debts;

 

• start an emergency fund for any type of unforeseen financial situation;

 

• try to put at least £1,000 into a debit card and only use it in case of small emergencies that would otherwise threaten your debt-free goal;

 

• Use prepaid cards instead of cards from where you may be tempted to overdraft. Remember that the overdraft temptation is the greatest enemy of living debt-free;

 

• Try to establish a mutual financial emergency budget together with family members or close friends. The more people agree to this, the higher the chances are that all of them live debt-free, because you always help each other throughout difficult time;

 

• keep some cash in a safe – having cash at hand is always a good way to avoid debts;

 

These are the most important things to get you started. Remember that living debt-free often means that you have to establish a tight monthly budget for all of your payments and stick to that budget unless emergencies arise.