Financial Retirement Planning

Debt Freedom

Debt FreedomWe all would like to be debt free by a certain time in our lives especially as we get closer and closer to retirement. Managing our debts, whether it is a loan, mortgage or credit cards can be a tough job especially once it gets out of control. For most people, it is always sometime in the future, however the future never comes and we are still aiming for debt freedom ten years later. The only way around this is to have a definite plan that the entire family agrees to and supports. If you cannot make that happen you are going to have a challenge on your hands.

What is Debt Freedom

Most people think of debt freedom as having paid off all of your debts and not having to pay any loan payments or mortgage payments. For many people at all ages this is a tough objective and a small percentage actually achieve this definition of debt freedom by the time they retire.

On the other hand some groups will define debt freedom as everything being paid off with the exception of their mortgage, which has a specific payment amount and a final end date. While this is really not debt freedom, they can comfortably pay their monthly payments and these payments do not hamper their life style in any way.

Regardless of how you define debt freedom, many people are trying to achieve their definition of debt freedom and have found that the following strategies will help them meet their objectives.

Manage Holiday Spending

Holiday spending often puts people off their plans and causes debt to get out of hand.  Spending more than they planned at Christmas, taking a vacation that they really could not afford or spending more than they plan all contribute to not meeting the objective. While it is easy to say, set a budget for your holiday and meet that budget, few people are actually capable of doing so. It takes a lot of discipline and it also takes realistic budget planning as well.

Set a Budget

Set a budget for your holiday as well as everyday life. Be realistic and stick to it. We cannot anticipate everything so every budget should have a contingency built into it, however it does not mean that it automatically will be spent. It is there for the unforeseen and for emergencies. having a budget in the first place means you have thought about were you are spending your money and taking steps to manage it. This is an excellent first step and many people find that they will reduce their expenses just by giving some thought to what they are spending their money on and will reduce it accordingly.

Sticking to a Budget

Sticking to a budget in order to achieve debt freedom is one of the most difficult things to do. But if you have a budget, then you are halfway there. Now it is just to have the discipline to stick with it. Challenge all expenses and ask yourself if you really need this item or service. Can you do without? You may be surprised at how much you can save and free up for other things.

Assess your budget at the end of every week and adjust your future expenses accordingly to bring you back on to your budget target.

Family Commitment

Many budgets fail because they cannot get their families commitment to meeting the budget. If other members of the family control spending,  or portions of it, then unless you get them to join you in meeting your budget, there is little chance you will be able to meet your budget and achieve your objective of debt freedom.

The best budgets and debt freedom plans are fully supported by all members of the family, including your spouse and children.

Unpaid credit cards are a huge issue for many people. Credit card interest rates are very high some as high as 29% and at those rates, if you do nothing else you must pay these off as soon as possible. When you are paying a lot of interest, there is less money available to retire any debt that you may have.


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2 Responses to “Debt Freedom”

  1. we are free of debt for the first time in our lives! it is such a great feeling. if you can reach debt freedom, enjoy it, keep it and do not allow debt freedom to get away from you under any circumstances.

  2. In these financially trying times, people are faced with the burden with their debts. While the introduction of credit cards has made our lives easier in several aspects, they have also created problems at the same time. You might find yourself with a huge credit card bill, which you may not be able to pay off immediately.

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