Staying debt free

28 November 2012

By developing better debt management skills and changing your spending habits you can get out of debt and, more importantly in the long term, avoid finding yourself right back in the same situation that you were in before.

Here are a few basic principles to keep in mind if you want to find yourself debt free:

1. Formulate a monthly budget and stick to it. Review it on a monthly basis.

2. Never fall behind on your monthly payments for any of your bills. This includes credit cards, store cards, utility bills and any other financial obligations you may be under.

3. Only take now and pay later if you can afford to pay the monthly balance on the outstanding credit that comes with the purchase.

4. As a rule of thumb, always have at least three months living expenses tucked away should any unforeseen accident, loss of employment or emergency arise.

5. Divide your savings as follows:

• Savings for college (How many kids do you have?)
• Savings for weddings (Do you have girls?)
• Savings for a replacement vehicle. (How long will your current vehicle last?)
• Savings for retirement. (Where do you currently stand with your pension etc? How much do you aim to have saved up for your retirement?)
• Savings for other major purchases. If I need a new (fill in the blank) I will have the money to pay cash and will only pay cash.

6. Learn to negotiate a better deal on everything. Negotiation is an art form that anyone can learn. Employing a little bit of haggling can put a little more money in your pocket!

7. Understand the interest charges. When you take out a car hire-purchase loan, a housing loan or when you use your credit cards, you must know that you will be paying extra amount of money to cover the interest charges.

8. Always buy on sale. If you are certain that you will be using items on sale over and over, buy them when they are on sale and stock up. Avoid paying full price.

9. Be realistic. Set attainable and achievable goals. If your spending is more than your income, cut down on spending. However, if this is not possible for you, increase your income and stay in debt-free positive territory.

10. Plot your net worth:
Just as an organisation would carry out an audit from time to time to find out its overall performance, it is also recommended that you should do your own personal net worth calculation to keep track of your financial standing.
A simple and straightforward calculation is shown below:

Total assets – Total liabilities = Net worth
Total assets: Combine all your money from your savings or checking account, trust funds, property value, car value, stock value, etc.
Total liabilities: Combine all your debts such as home mortgage, credit card balance, etc
Your goal is to have a positive net worth value at all times and it should be I increasing as time goes by.

Enjoy a debt-free life today – contact a DebtBusters consultant using the Free Call Back service on our website ( or call us on 0861 663 328

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