How To Stay Debt-Free
You’ll often hear from veteran budgeters and personal finance experts that getting out of debt is the easy part. The hard part is staying out of debt and intentionally building wealth.
Now, I don’t know if I agree completely. Getting out of debt was soul-sucking and took for-fucking-ever for me, but I will say that falling back into debt is almost effortless in our society and being intentional is difficult when you have temptation to live above your means everywhere you look.
That being said, here are 5 ways my family stays out of debt after getting out of it and uses our cash-flow intentionally. This is how we continue to live a debt-free life.
We Are A One Car Family
Cars are expensive, new or used right now. Especially with inflation and chip shortages. That’s why we have opted to have one car for the both of us. It’s better for the environment, costs less and we’re lucky we don’t have complicated schedules to juggle.
We save on gas, insurance, routine maintenance and a car payment.
I know this isn’t feasible for everyone, but it works for us. Plus, our public transportation is easily accessible where we live.
We Are A One Credit Card Family
Listen, I know all about travel hacking, cash-back and point rewards by using credit cards. And as much as I wish I had that level of discipline, It’s just not my cup of tea and that’s ok. I know myself enough to understand that I cannot and should not have credit cards. Because Etsy and Target would be as empty as my line of credit. Let’s be honest.
That’s why my husband manages the one we have. We put utilities and other payments on the credit card and pay it off, in full, each month.
We don’t pay late fees or interest ever on the credit card and it maintains the credit scores that we want.
We Live Below Our Means
We live on a budget each month, we save money each month in an Ally high-yield savings account and we cash-flow our big trips and purchases.
We don’t dip into savings, we don’t put anything on credit cards, we don’t spend more than we make.
I also keep a careful watch on our expenses each month and diligently check in with my Google spreadsheet and Mint App budget each day to make sure I know where everything is going.
Is this exhausting sometimes? Yes, I’m not gonna lie, but when I tell you it’s worth it, I mean it’s worth it.
For example, in 2021 we spent $19,000 on food because we didn’t budget. There are many, many reasons for this, and that may be another blog post, but now that we’re budgeting, we are slated to spend much much less on food in 2022.
We Plan ahead
In addition to budgeting and making sure we know where our money is going each month, we make an effort plan ahead when it comes to our finances.
We use sinking funds for our trips, purchases and holiday expenses. We use the Ally bucket system to keep everything in one place — and I love their account because it is so visual.
Sinking funds make it easy for us to know what is coming up on our ‘to-do list’ each year and month AND how much money we’ll need to allocate to reach our goals.
For example, we spent $2,000 on Christmas in 2021. This includes gifts and travel. That means in 2022, we’ll be saving around $170 per month so we can have that $2k ready when we need it.
There are times where we don’t use sinking funds and just dump lump sums into an account and close it out. But either way, having these funds saves us from overspending, not being prepared or going into debt to cover costs we easily could have saved for.
Sinking funds are a great way to make saving money less daunting and more attainable.
We Shop Sales
Since we enjoy the outdoors, there are expenses that come with that… in the form of expensive equipment and gear. We always shop sales and rarely, if ever, buy anything full-price
This goes for food and almost everything else that we outside of small items we get off of Amazon
These are ways in which we maintain our debt free lifestyle. It’s not glamorous or some mind-blowing best-kept-secret-strategy, but it works!