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Become Debt Free By 30 with these Six Rules

Become Debt Free By 30 with these Six Rules

I wish someone had told me when I was in college that getting a credit card with a student ID was stupid. I wish someone else would have explained to me what 21 percent interest on store credit cards meant.

Before I turned 30, I was massively in debt with kids, student loans, and no end in sight. Fortunately, with a lot of reading and a lot less spending, I got out of debt before I turned 40. It was a long road–and no fun at all. If I had only realized when I left for college that I was not going to be able to live the way my parents did (after working for 20 plus years, I might add), I might have saved myself a lot of pain. Then again, I was pretty stubborn in my 20s, so maybe not. Either way, you can avoid debt and be debt free by the time you’re 30, if you follow these rules:

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1. Don’t go to college unless you have to.

This goes against everything everyone told you in high school, I know. I thought I had to go to college in order to “be a person.” Turns out, it’s not remotely true. If you want to be a nurse, a lawyer, a physical therapist or a rocket scientist, then yes, go to school and go to a good one. But if you want to be a writer, a welder, a restauranteur, a baker or something else entirely, avoid the four-year degree. Look instead for a community college that offers certification or an Associates degree in your potential field. Apprentice with someone to learn how to be a carpenter or commercial fisherman. My husband has a degree in English and taught himself computer programming. He is now a leading computer programmer and systems administrator. Be practical about what your job plans are and avoid the massive debt.

2. Spend less than you make.

This sounds obvious, but it is sometimes harder than you think. You need to determine just how much you bring into your household each month, and spend less than that. So, even if that couch looks really awesome, you can’t get the store credit card (even if they give you 10 percent off just for filling out the application). If you need a car, you have to save up for it and take the bus or the subway until then. It seems like a pain sometimes, but when you realize how much you are not spending every month in payments to this, that and the other thing, especially once the couch is stained and the car needs repairs, it’s really much better–and more freeing to not be working just to pay off debts to someone else each month.

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3. Pay yourself first.

Yes, I know that you have to pay the rent and the power bill and the cell phone bill and the cable bill. But pay yourself first. Take 10 percent right off the top and send it to your savings account. This way, if your car (the one you paid cash for) does have a problem, you’ll have enough saved to pay for the repairs or buy a new one without damaging your monthly bills. If you are having trouble paying at least 10 percent of each check to yourself, then consider lowering your expenses. Get rid of cable and watch shows on the Internet. If you can’t afford your Internet bill, visit the library to use their wi-fi (and get more free entertainment by borrowing books).

4. Make debt your first bill.

If you have debt, make it your first bill (except for rent and savings). After saving an emergency fund of about $1,000 in the beginning, work towards paying down debt your first priority. After you pay yourself via the savings account, pay as much extra as you can towards debt. Reduce your other expenditures in order to get that debt paid down.

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5. Don’t use credit cards for everyday expenses.

Unless you are using your credit card to save up rewards or miles and are sure you can pay it off each month, do not use your credit card for everyday expenses. If you must keep a credit card, and you really shouldn’t, keep one and put it away for emergencies only. Like that pair of glasses you need when yours break or the car repair that you don’t yet have enough in savings in to cover. As you start saving money in your emergency fund, you will have cash to depend on instead of credit and you can eliminate credit cards from your life entirely. Despite what it felt like in college, credit cards are not free money.

6. Stop paying for stuff you don’t need.

Gym memberships, cable TV, concerts, movie rentals. Get rid of it. Stop paying for extra stuff. Learn how to shop cheap. Go to thrift stores for basic needs like utensils for the kitchen, a chair for the living room, new clothes. There are lots of groups on Facebook now advertising used items for sale. Go for a run or a bike ride instead of going to the gym. Use a yoga home video instead of paying for classes. Skip the spendy concert and go to a free concert in the park. Soon, you’ll realize that forking over your hard-earned cash for stuff that nets you very little in return is more painful than going without it.

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Published on September 17, 2018

How Being Smart With Your Money Leads to Financial Success

How Being Smart With Your Money Leads to Financial Success

Achieving financial success is not something that just happens. Maybe if you win the lottery or something, but for the average person like you or me, it comes from a series of small steps you take over a long period of time.

With each step, you form a new smart money habit. And with each smart money habit, you build towards financial independence.

So what sort of habits can you form to get on that path? Let’s take a look at smart money habits you can start today to get you closer to a financially independent future.

1. Avoid being “penny wise but pound foolish”

It’s tempting to try saving a couple cents here and there when buying small items. However, that’s not where the real money is saved. You’re putting in extra effort for something that doesn’t move the needle.

You get the most bang when you’re able to cut down on your bigger bills. For example, finding a lower interest rate for your mortgage could save you $50+ per month. And cutting your transportation bill by purchasing a cheaper car or taking public transportation can provide large gains as well.

So, look at your recurring expenses such as housing, transportation, and insurance, and see where there’s wiggle room. It’s a much better use of your time than trying to pinch pennies here and there on smaller purchases.

2. When you want something big, wait

Impulsivity can get you in trouble in most aspects of life. Finances are no different.

It’s human nature to see something and want it right then and there. It starts as a kid in the checkout line at the grocery store, and it continues on through adulthood.

We get an idea in our head of something we want, and it’s hard not to go out and get it right then.

A good example is wanting a new car. Perhaps you’ve had your car for several years. It’s crossed the 100k mile mark. Maybe maintenance is due, and you’re annoyed that you need to replace the timing belt or purchase new tires.

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So, you get the itch.

You start digging around online, and you realize you could trade in your current car for something newer and more exciting… all for a few hundred bucks a month. Then you get obsessed.

Here’s where you have to take a step back.

Your newfound obsession is clouding your judgement. Rather than giving into the impulse, wait it out.

Set a timeframe for yourself. Maybe you come back to the decision three months down the road. See if the obsession lasts.

It might, but often, a funny thing happens. Often, you forget about it. And often, you find that the new car wasn’t a need at all.

The impulse faded. And you just saved yourself a ton of money.

3. Live smaller than you can afford

You finally get that big raise. And you want to celebrate – and why not?

You’ve been looking forward to this forever. And after all, it was all due to your hard work.

That’s fine, splurge a little. However, make it a one-time deal and be done.

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Don’t get caught in the trap that just because you’re now making more money, you should spend more.

Too often, people get more money and feel like they that gives them the means to buy a bigger house, a bigger car… you know the drill. Resist.

The fact is that living smaller than what you can afford is one of the fastest ways to build savings.

But if you constantly upgrade as you begin to make more, then you’ll never get ahead. You’ll just build up more debt along the way and have just as little wiggle room as before.

4. Practice smart grocery shopping

Food… it’s one of the biggest portions of any budget. And if you’re not careful, it can be one of the biggest drains on your wallet.

But luckily, there are a few things you can do to ensure that you stay smart with your money when buying groceries.

Create a grocery budget

Set a strict weekly grocery budget. When you know how much you can spend on groceries, you can then plan your weekly menu around it.

Once you know what all you need, you can go shopping and keep a running tally as you shop to ensure you’re on track.

I tend to do this in my head, rounding for each item. However, writing it down as you go would probably work best for most people.

Make a list… and never deviate

Never go to the grocery store without a list. If you go to the store with a ballpark idea in mind, you don’t have a true ide of what you need.

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You’re not well-researched. You don’t know what the sales are. As a result, you’re going to make decisions on the fly.

These impulse decisions will lead to overspending, which will derail your grocery budget.

Eat before going grocery shopping

It’s also important to eat prior to going to the grocery store. Hunger is a powerful force.

If you’re shopping on an empty stomach, everything is going to look good. In particular, you may find a lot of ready-made, processed snacks will look enticing.

After all, you’re hungry now and that food is easily available. So subconsciously, you may lean towards those items.

Unfortunately, not only are those items typically less healthy, but they’re likely more expensive. You pay for convenience.

However, when you eat prior to shopping, then you’ll shop with a clear mind. Your hunger won’t cloud your judgement, influencing you to make poor decisions like a cartoon devil resting on your shoulder whispering in your ear.

This makes it much easier to stick to your grocery plan.

5. Cancel your gym membership

Now that you’re all set on your food, it’s time to get smart about managing your budget in terms of physical fitness. And let’s begin by avoiding the gym. The gym bill, that is.

The average gym membership costs around $60 per month. That’s $720 a year.

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Yet, two out of three gym memberships go unused. That means two-thirds of people who have a gym membership are literally giving away almost a thousand bucks a year. It’s crazy!

I recommend seeking an alternative. One good alternative is to look into fitness streaming services.

Streaming services allow you to stream hundreds of workouts like Insanity and p90x, right in your own home for around $10-20 a month. That’s $40-50 less a month than the average gym membership.

Of course, then there’s the free option. The internet is full of free workouts that you can do on your own with minimal or no equipment.

For example, there’s the Couch to 5K program, that I personally used a decade ago to ease myself from couch potato to running my first 5K race. If I could do it, anyone could.

Then there are free resources like reddit that have limitless information on workouts. The Fitness subreddit has done all the research for you, populating workout tips and detailed workout routines for anyone to use in their wiki.

There are several routines that require no equipment. And you can join in on the subreddit to become part of the community, making it easier for those seeking comraderie and encouragement in their fitness goals. All for free.

It’s baby steps… And baby steps can start now!

I’ve never met anyone that can’t stand to be a bit smarter with their money. And on the flip side, anyone can get smarter with their money. But remember, it doesn’t happen all at once.

Begin by fighting your impulses. Prepare for the week and be smart at the store. And cut monthly expenses like gym memberships that are overpriced and you probably aren’t getting your money’s worth out of anyway.

The devil is in the details. And the details can change your lifestyle and prep you for a financially independent future.

Featured photo credit: Unsplash via unsplash.com

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