Advertising
Advertising

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:

Advertising

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.

Advertising

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.

Advertising

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.

Advertising

More by this author

Michelle Kennedy Hogan

Michelle is an explorer, editor, author of 15 books, and mom of eight.

8 Things to Remember When You Don’t Know What to Do with Your Life 30 Fun Things To Do With Your Friends Without Spending Much 10 Benefits of Deadlifts You Probably Never Knew 9 Benefits of Jumping Rope You Probably Don’t Know 9 Signs It’s Time to Quit Your Job

Trending in Money

1 How to Use Credit Cards While Staying Out of Debt 2 How to Use Debt Snowball to Get out from a Financial Avalanche 3 How Personal Finance Software Helps You Get More Out of Your Money 4 The Best Ways to Save Money Even Impulsive Spenders Can Get Behind 5 How to Answer the Tough Question: What are Your Salary Requirements?

Read Next

Advertising
Advertising
Advertising

Last Updated on March 4, 2019

How to Use Credit Cards While Staying Out of Debt

How to Use Credit Cards While Staying Out of Debt

Many people will suggest that the best thing to do with your credit cards during these tough economic times is to cut them up with a pair of scissors. Indeed, if you are already in huge debt, you probably should stop using them and begin a payback strategy immediately. However, if you are not currently in trouble with your credit cards, there are wise ways to use them.

I happen to really love my credit cards so I will share with you my approach to how I use mine without getting into deep financial trouble.

Ever since about 1983 when I got my first Visa card, I continue to charge as many of my purchases as possible on credit. Everything from gas, groceries and monthly payments for services like my cable and home security monitoring are charged on credit. Despite my heavy usage, I have maintained the joy of never paying any interest fees at all on any of my credit cards.

Advertising

Here are some tips on how best to use your credit cards without falling into the trap of paying those nasty double-digit interest fees.

Do Not Treat Credit Cards as Your Funding Sources

Too many people treat their credit cards as funding sources for major purchases. Do not do this if you want to stay out of trouble. I use my credit cards as convenient financial instruments so I do not have to carry around much cash. In fact, I hate carrying cash, especially coins. When you buy things on credit, the purchases are clean and you will not get annoying coins back as change.

I do not rely on my Visa, MasterCard or American Express to fund any of my purchases, large or small. This brings me to my golden rule when it comes to whether I will pull out any of my credit cards either at a retail or online store.

Advertising

I never purchase anything with my credit cards if I do not have the actual cash on hand in my bank account.

If I really cannot pay for the item or service with cash that I already have at the bank, then I simply will not make the purchase. Remember, my credit cards are not used as funding sources. They are just convenient alternatives to actual cash in my pocket.

Make Sure to Always Pay Off Balances in Full Each Month

The next very important part of my overall strategy is to make absolutely sure that I pay the balances in full each and every month no matter how large they are. This should never be a problem if the cash has been budgeted for my purchases and secured in the bank. I have always paid my full balances each month ever since my very first credit card and this is why I never pay interest charges.

Advertising

Using Credit Cards with Rewards

Most of my credit cards are of the “no annual fees” type, including one MasterCard on a separate account I keep at home as a spare in case I lose my wallet or incur any fraudulent charges. However, I do use a main Visa card which does have an annual fee because all purchases on that card reward me with airline frequent flyer points. For me, the annual fee is worth it since I do travel and I get enough points to redeem many free flights.

You have to decide for yourself if you will charge enough purchases on credit each year without paying interest charges to warrant a credit card that rewards you with airline points (or other rewards). In my case, the answer is “yes” but that might not be the case for you.

I occasionally use a MasterCard or American Express card on small purchases just to keep those accounts active. Also, I have been to the odd retailer that accepted only a certain type of credit card, so I find that having one from each major company is quite handy. Aside from my main Visa card which earns the airline points, the rest of my cards are of the “no annual fees” variety.

Advertising

So this is how I use my credit cards without getting into any financial trouble with them. This strategy is recommended only if you are not in debt, of course. In fact, it is worth keeping in mind once you’re out of debt so that you can keep your credit cards active and treat them responsibly.

What are your credit card usage strategies? Let me know in the comments — I’d love to hear what methods you use.

Featured photo credit: Artem Bali via unsplash.com

Read Next