In this day and age, it is quite challenging to imagine life without credit. If you look around, you will find almost every person has some sort of debt – small or large. It seems like it is all but impossible to live life without debt.
It has become an indispensable part of yours. It is not just about big purchases like houses and cars, and even small needs are funded with debt. There are various types of small loans that have been designed to help you tide over during financial emergencies.
Everybody often blames high living costs and low wages for being under debt, but nobody finds a way to live without credit. Financial independence has recently gained eminence.
Everyone is consulting a financial advisor to help debt management reach out to their financial goals. The fact is that financial independence is living debt-free.
You may not be convinced with the idea of living debt-free life because somehow, you have to build your credit to fund big purchases like housing and car.
You cannot have your own credit file without borrowing money, and as a result, you can borrow money at higher interest rates. Well, you can still make such big purchases. This blog tells how it is feasible to live without debt.
Build an emergency cushion
You do not need to rely on loans to fund your unexpected expenses because you can create an emergency cushion. You should set aside a portion of your income every month so that it keeps growing.
When you come up with a financial emergency like you have broken down your laptop, you can get it repaired by dipping into those funds. This is a way better option than borrowing money. This is because you can save money on interest.
Create a saving account for specific goals
Emergency cushion will help you tide over during financial emergencies, but you need to be rigorous with your savings as far as it is about big goals. It is a must for buying a house or a car.
You should be desiccated to your savings, so you reach out to your goal on time. If it is quite challenging to stash away for every purpose, you should set priorities.
Buy a car in cash
It is not set in stone that you have to take out a loan to buy a car. You can think it is impossible to save that much money, but you can if you start now.
To borrow money, you arrange a down payment, which is usually 10% of the market value of your car, and then you pay down a fixed sum of money every month.
How do you arrange that money to keep up with payments? Of course, you take that money off your monthly income. So, it makes sense that you can try to save money worth the market value of your car – in fact, more than that.
You should dedicatedly pop money into your savings account. Once you have arranged enough cash, you can go to the showroom to buy it outright. You will be able to save a lot of money in interest.
A car loan costs you as likely twice its market value. If you can pay down the double value of your car, you can manage to save money for your car. When you pay for your car in cash, you do not need to show your credit score.
Buy a house without a mortgage
You cannot buy a house without a mortgage if you cannot buy a car in cash, but you can buy it in cash. However, you will have to follow a different trick than you follow for buying a car.
While renting, you need to set aside money as a deposit for your mortgage if you are planning to fund it. You should do the same thing even if you are planning to buy it outright.
The only difference is that you will keep investing your savings to let them grow. If you have successfully managed to let your savings grow, you can use that money to buy your dream house.
The best part is that you do not need to maintain a credit score, and you do not need to pay double the cost of your house that you pay down over the mortgage term. It may seem impossible, but you can do it.
If you do not have any knowledge about investments, you should take help from an expert who can guide you about the best investing assets based on your financial goals.
Travel without debt
You carry a credit card with you when you go on a trip. It is a common belief that you may need it while checking in the airport or hotel etc. The fact is that carrying a credit card seems so convenient to you that your mind is taking cash with you.
You fear that it can be stolen, but in the same way, your credit card can be stolen and make big purchases at your expense. You should develop a habit of carrying cash with you. You can immediately pay without worrying about your credit card bill payment on time when you have money.
You do not need to build a good credit score to get a credit card with exciting offers and rewards if you learn to meet all of your expenses in cash.
Investing for retirement
If you want to live a debt-free life in the golden years of your life, you should start investing money for your retirement. Make sure that you invest the money that you save for your retirement. The money will keep growing, and you will be able to have a lot of money to get by that time.
The final word
Although it may seem that it is impossible to live without debt, it is not. You need to learn the ways to manage your cash as smartly as possible. Be quick in saving and investing so you do not end up running out of money at the time.