What do you think is the biggest aspiration for millennials? If you guess – purchasing a house or getting married, let us tell you right away – It isn’t so!
Contrary to popular belief, the biggest aspiration for today’s millennials is to remain debt-free. It is mostly attributed to their desire to be flexible when it comes to making life choices.
Millennials today wish to have more freedom when it comes to changing their houses, their jobs, or even their locations. And, they often look at debt as a shackle that can prevent them from leading their lives the way they want. In other words, they believe in what Publilius Syrus’s warned about – “Debt is the slavery of the free.”
So, what exactly does a debt-free life look like? Read on to know more!
Pros of a Debt-Free Lifestyle
These pointers below walk us through the pros of a debt-free lifestyle and at the same time offers a fair idea about leading the same.
A life free from stress
Accumulated debt follows us around like a gloomy cloud.
.. and the best way to stop it from raining on our parade is to pay it off as early as possible. Typically, individuals who do not have any debt are not constantly worried about paying EMIs, clearing outstanding bills, etc.
This does not put them in a stress bubble and allow them to focus their time and energy on other aspects of their life.
More importantly, it puts their mind at ease!
Ability to save more
The moment you become debt-free, your ability to save more increases automatically. Zero additional expenses towards EMIs or unpaid bills leave you with more money and opens new avenues of savings.
Say, you can now forward a portion of your savings to improve the quality of your life by starting an emergency fund, getting life insurance, or making investments.
A low cost of living
The mantra to lower your cost of living is to take care of your piling debt!
To elaborate, a debt-free person no longer directs his/her limited income to pay off loans, interests, or other forms of liabilities. As a result, the cost of living also decreases dramatically. Hope you are taking notes!
Provides financial freedom
With more disposable income at hand, individuals can streamline their finances to meet short-term goals. For instance, they may plan a trip to unwind, get a fancy spa treatment for once, invest in financial tools, or enjoy the feeling of having some extra cash to spare even at the end of the month!
Facilitates better retirement planning
Debt-free individuals do not spend a large chunk of their career paying off loans and meeting financial liabilities. Instead, they avail themselves the chance of directing their savings towards building a secured retired life.
The early retirement planning also enables them to build a healthy retirement corpus or buy and sublet a small house.
Phew! Too many perks to count, if you ask us.
However, you may still have the question – How to become debt-free?
Tips to Build a Debt Free Life
If you are struggling to come out of what you consider a quicksand of debt, follow these debt resolution plans to escape it successfully!
Tip 1 – Estimate your current debt burden and prioritize pay-outs
Your first step should be to determine how much you owe and to whom. Subsequently, start paying off the smallest quantum of debt and then move on to the bigger ones. This is an effective debt planning strategy wherein you stay motivated to tackle one debt at a time.
Tip 2 – Purchase what you need
The best way to stop adding onto the already existing debt is by limiting your immediate purchases to essential needs.
Set a target to pay off your current dues and remain debt-free for some time before your purchase things you do not have much need at the moment. Also, it will help you if you steer clear of things you cannot afford.
Tip 3 – Practise budgeting
Create a budget at the beginning of the month, estimate all your income and probable expenses and then stick to it. Also, be cautious enough to identify unwanted expenses and eliminate them as and when possible to achieve a debt-free living.
Tip 4 – Consider a balance transfer
Also, as a last resort, try consolidating your debt.
But, you should proceed with this option only if you avail of a low-interest bearing alternative. Suppose you plan on availing a personal loan to consolidate existing debt, make sure your chosen credit option accompanies a low rate of interest and extends simple terms of repayment.
There are, thus, several ways to reduce debt and lead a debt-free life! However, to follow it, you need to have control over your expenses and be dedicated to achieving your financial goals.
We hope that the debt-free lifestyle finds you in good spirits!
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