Did you know that the average American family has over $15,000 of credit card debt and a staggering total debt of over $75,000? And if that’s not scary enough, when you factor in the $130,000 that every American taxpayer would have to shell out just to pay off the national debt, our country’s financial situation starts to look pretty bleak.
So what does living debt free have to do with survival anyways?
Well, in my opinion, Everything! Living debt free is an extremely important part of any well-rounded survival plan. Living a debt free lifestyle is all about your long-term survival. It’s about thriving, living a comfortable existence, and having peace of mind while everyone else is living amid the chaos.
But what if the economy collapses? How will living debt free help you survive?
As the country falls deeper into economic turmoil, living a debt free lifestyle can help shield you from some of the initial pain. As things start to get worse, creditors are going to step up their collection efforts and really start to come after debtors with a vengeance. The last thing you need prior to an economic collapse is a sheriff knocking at the door because you didn’t pay your bills.
Remember, debtor prisons were once a real thing here in America and if things get bad enough they could make a comeback.
5 Ideas for Living Debt Free:
Establish a Budget
It’s really amazing how much money Americans waste. Establishing a written budget will help make sure that every dollar you make works for you and not against you. At the end of every month, you should have a written plan for every dollar that you will bring next month.
Establishing a budget can help you to realize how much money you spend on things that really aren’t necessities.
Use the Envelope Budgeting System:
If a written budget seems a little tough, you may want to consider the good old envelope system. Basically, you put your monthly budget into various envelopes; food, gas, utilities, rent or mortgage, entertainment, preps, etc….
This can help you make sure you’re not spending more than you should be on a certain category (like entertainment).
The Debt Snowball:
Paying off debt can sometimes seem overwhelming which is why Dave Ramsey’s Baby Step #2, The Debt Snowball, is a great way to get started. For those of you who are not familiar with Dave Ramsey, he is basically one of the top debt free living advocates in the country. In his book, The Total Money Makeover, he outlines 7 baby steps to living a debt free life.
Baby step #2, the Debt Snowball, suggests that you list your debts from smallest to largest and then start with the small debts first. The rational is actually pretty simple; the motivation that you obtain from paying off these small easy debts will create a snowball effect that will help you stay motivated when the going gets tough.
As Ramsey points out in the book, Personal finance is 20% head knowledge and 80% behavior. When it comes down to it, we all know what we should be doing; most people choose not to do it.
Stop going in debt by maintaining a high credit score.
One of the biggest scams that the financial institutions have managed to pull on Americans is the myth that your credit score somehow equals your financial security. Nothing could be farther from the truth; in fact, keeping a high credit score only ensures one thing. It guarantees that you will constantly be in debt!
The only way to maintain that high credit score is to continually borrow money, pay that money off, and pretty much live in debt for the rest of your life. The only thing that having a high credit score means is that you are good at borrowing money, not good at making it!
Make More Money
This one is a no brainier; the only real way to combat the increasing cost of living is to start making more money.
In the long run, one of the best ways to increase your cash flow is to go into business for yourself. Whether you’re a mechanic, a car salesman, or even a factory worker you have talents that can be taken outside of the workplace. Figure out what you’re good at, and find a way to make money off of it.
Let’s take the mechanic example. Instead of making your boss rich, why not buy some old clunkers, fix them up, and then sell them? Even if you do one every couple of months, imagine what you could do with that extra income.