Two statements that are seemingly opposite: Being in debt is hard. Being debt-free is hard.
If you had the choice, which one would you choose?
I think most people would choose the being debt-free option. It’s just an amazing sense of relief to be debt free and not stressing out how you’re going to pay off your credit cards or make that month’s loan payment.
It’s similar to being on a diet. Losing weight is hard. Once you’re at your desired weight, maintaining it is hard.
Whether it’s your weight or your debt, you worked hard to get where you wanted to be. Don’t let the pounds or the debt creep back up on you again.
You don’t need to deal exclusively in cash to maintain a debt-free life. Sometimes using the credit card is more convenient. Just make sure you have the funds in the bank account before pulling out the plastic.
Getting back to the diet and maintaining weight thing, I love bakeries and candy shops, but there’s a very good reason I work hard to avoid them. I have a portion control problem in these areas. It’s hard work maintaining your weight. But is it any harder than maintaining a debt-free status?
I see something I want. My credit card has a zero balance so I know I can pay for it. Using the credit card instead of cash almost seems like I’m getting it for free. But do I really need more stuff in the house? When it comes to debt, I need to exercise portion control here, too, just like I do with food.
LIVING FRUGALLY
Part of becoming debt-free is living more frugally.
Don’t stop now!
Staying debt-free is hard work. Especially when you’re a low-income earner. It’s OK to buy something or take a trip as long as it’s not going to put you back into debt. If you have money saved up for your purchase, then go ahead and treat yourself.
We might not be struggling so much financially after slaying the debt, but we still have to live within our means. Don’t let that debt creep back in with lifestyle enhancements.
If you’re financially capable of doing so, it’s OK to spend money and have a little fun or take a vacation. Plan how much money you need and stick to it.
PAY THE CREDIT CARD IMMEDIATELY
After I paid off all my credit cards and became debt-free, I still needed to use them from time to time.
Internet purchases, a big car repair bill, the dentist, or an emergency vet visit were the main culprits.
I used to make it a rule to go to my online bank account and pay off that amount right away.
Before the amount even got posted to my credit card statement, I had paid it.
Good on me. I paid off the amount before the credit card bill even showed up!
Somewhere along the line, I stopped doing this. I regret getting lazy in this department and I vow to do better moving forward!
The problem is I’m not always as organized as I’d like to be. I think I know the due date. As a precaution, I put a reminder in my calendar. And the next thing I know, I missed the due date!
OK, I probably only missed by a couple of days. Most credit card companies aren’t going to make a report to the credit bureau for something like that. I recently missed a payment of $115 that was due on February 10. I had ignored my email reminder and on February 12, I realized I hadn’t paid it.
Damn! Paid it in full right away, but I know I have to get myself back on track to pay my credit card right after I make the purchase.
SET GOALS
We’ve talked about goal setting and money maps. It’s mapping out your financial future and figuring out how you’re going to get there.
Let’s keep it simple. Money comes in. Money goes out.
Back in the olden days before GPS navigational systems, we had to use a road map to figure out how to get from Point A to Point B.
That’s a paper map. Paper is good. Use a paper and pen to map out your money goals. There’s something about connecting with paper that makes it more personal, more real, and more likely to follow through.
Make some goals for your money and figure out how to bridge gaps between your income and your expenses.
CARS
We’ve talked about cars around here before and why car loans are dangerous because it’s just more debt that we don’t need. The reality is most people can’t afford to buy a new car outright, so they take out a loan.
The cheaper option is to buy a used car that is safe and reliable.
Do some research and use your best judgement to find a used car that will be low maintenance for years to come.
The biggest expenses on my car (2012 Mazda 3) are gas and insurance that run me about $300/month.
I get the oil changed based on my mechanic’s reminder sticker on the window. About $90 every few months thanks to the synthetic 0W20 oil. My last car, a PT Cruiser, was about $50 for an oil change.
I’m planning for a front brake job on the next oil change – about $400.
In February, 2021 I replaced all the tires, and that cost just over $500.
I’ve had the car for over four years so that’s not so bad for maintenance costs. 2021 is the most expensive year for this car! I don’t mind driving an older car and having the satisfaction that I don’t have to worry about making any loan payments.
Safety is the most important thing. Always remember that. You don’t need to be driving a rust bucket klunker that’s constantly breaking down.
If you can’t afford a car, you need to look at other options such as riding a bike, taking public transport, walking, or car share.
TRACK YOUR SPENDING
I’m not a budget person.
That being said, I use a budget spreadsheet to track my spending. I talk more about that in my post about using a backwards budget.
The technique is simple enough. Track your income and your expenses so you know approximately how much you spend each month. Then make sure you have enough money in the bank account to cover it.
I don’t like tracking my spending any more than I like creating a budget. A little reverse psychology works wonders on me. I’m careful before spending money on something because I know I’ll have to write it down on the spreadsheet.
RENT
I’ve owned a couple of houses aka money pits. Especially the last albatross.
I know, I know. It’s been drilled into our heads our whole lives that home ownership is the American (or Canadian) Dream.
Too many times that dream becomes a nightmare.
Real estate is expensive and so is renting in many areas. I know. I live in the Greater Vancouver Area, pretty much on target with Toronto as the most expensive housing market in Canada.
Sometimes a mortgage can be cheaper than paying rent. However with home ownership, you also pay city taxes and you’re responsible for maintenance. Have you priced out what is costs to replace a hot water heater, a furnace, or a roof?
It’s less stressful being a renter because now the homeowner, not you, is responsible for all those expensive repairs.
I know how hard it is selling a house and losing that security, but sometimes it becomes a financial nightmare hanging on to it.
Home ownership hasn’t been a smart financial move for me. I’ve been unlucky in real estate. That said, I am considering buying a condo or cheap home when I retire. And no, not in Canada. I can’t afford to retire in Canada. Or buy a house here either.
FEAR
I was motivated by fear to lose weight.
What fear motivates me to stay debt free?
Does peer pressure help?
As a single, you might get help from family or friends to motivate you to become debt free and keep you on track to stay debt-free. But more than likely, it’s going to be a solo journey that no one else knows about.
This blog is kind of my peer pressure. When it comes to weight and debt. It keeps me accountable.
Nobody wants to read that I gained 20 pounds or went into debt and took out a $20,000 car loan.
Social pressure.
And fear of going back to a place where I didn’t like being.
WEIRD
It’s not weird to be debt-free!
Just like it’s not weird to have money set aside for your retirement or a bunch of cash in an emergency fund.
Being debt-free and building a savings account (or two or three!) is hard.
But is it harder to have debt and no money saved?
My life is all about getting rid of debt, making sure I have enough money for emergencies, and have money set aside for my retirement.
Are those the traits of a weird person?
I know what it’s like to have debt and no savings. And I know how hard it is to reverse it, turn it around, and be debt-free and not worry so much about money.
I’m not going to lie to you. I still worry about money all the time. My income is too low and I find a few side hustles to supplement it like surveys, mystery shopping, and referrals from this blog. I also put my money to work making me more money by finding high interest savings accounts and investments that pay dividends.
WILLPOWER
I have no problem walking past shoe stores, clothing stores, and jewellery shops.
Horse tack shops, bakeries, and candy stores are a whole ’nother story! But at least I don’t whip out my credit card and go into debt for any of those things! I’m debt-free and I wanna keep it that way!
I want a debt-free life more than the instant gratification of buying something on credit!
So let me leave you with a final thought on how I stay debt-free and this is how you should live too.
Don’t buy things unless you have the cash to pay for them. If you don’t have the money now, work hard, save, and buy it later.
cheryl @ the lifestyle digs
This article first appeared on The Lifestyle Digs on March 3, 2021.
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