Living Without Debt

Careful, economic living can be thought of as a type of equilibrium; ideally, your income is always greater than the amount you're forced to spend, or at least equal in extreme cases. In this comfortable model, there is no room for debts to disrupt this cycle.

Debt can enter into the equation in numerous ways, especially by way of credit cards and high-interest loans. A healthy, balanced budget should require no need for such devices that can easily accumulate a great amount of debt, and should be designed in such a way as to allow you to remain financially independent, secure, and maintain a favorable proportion between the amount you earn and spend.

Loans are a form of lure, albeit attractive and even useful in limited cases. Keep in mind that loans are primarily beneficial to banks and big business that have a vested interest in the process. While you may believe that you've solved your problems by a newfound source of wealth, this wealth in fact belongs to others; it is merely funds being shifted from one location to another, in an abstract sense, while still remaining theirs. You then have the responsibility of paying your original debts by your own means, in addition to the added interest rate of the loan. In other words, loans should always be a last resort and used in extreme cases when you are confident that you will be able to pay them back. It is best to learn to rely on what you earn; then you'll have found financial independence and stability without worrying about high interest rates.

Regardless of the temptation you may have to make use of credit and loans, keep in mind that if you're on a strict budget and can't afford your current lifestyle, then perhaps adding additional eventual debt isn't the best solution. While the solution is indeed solved, it is only a short-term solution, with the outcome being even worse than your present situation. The end result of your financial measures should be stability and the elimination of undue stress; one defaulted loan could plague you for years to come.

We have all accepted, by now, that we are living in a consumerist society, where the satisfaction of our wishes is often possible only by purchasing goods or services. However, most people don’t enjoy the luxury of being able to spend as much money as they would like to. If you have to live on a tight budget, managing your expenditures wisely is of key importance if you want to avoid running into debt.

What you need is to draw up your budget carefully at the beginning of each month. Decide how much money you absolutely have to spend and, if possible, try to save as much as you can from what is left after you subtract the expenses. By planning everything well, you can easily avoid being short of money at the end of the month.

Consider using debit or credit cards. More than being just a convenient way of making payments, they can help you save money. On the one hand, the savings kept in the bank account will accrue interest. On the other hand, since it’s not always very comfortable to walk over to an ATM for withdrawing money, you might give up many unimportant expenses. Make sure to choose the bank that offers you the most convenient terms.

Speaking about withdrawing money, some banks will charge a fee every time you do that. The fee may be a percentage of the sum you withdraw or a fixed amount. In the latter case, it would be wise to make as few withdrawals as possible. Have a regular ATM day once a month, for instance, and withdraw all the money you will need for that month. Budget it well in separate envelopes and you can stop worrying about paying more than necessary.