If you have a lot of debt, you’re probably not sleeping as soundly as you should. There’s something about having lots of debt that keeps you up at night wondering how you’re going to be able to repay all the money you owe. Wouldn’t it be nice to be free of debt?

How to live free of debt is not a topic that most banks will discuss with you. After all, their bread and butter derives from the interest they make from loans and credit cards. If no one borrowed money from them, their business model wouldn’t work at all — they need consumer debt to make money.

Luckily for them, debt is no longer a taboo subject in today’s society. No one thinks twice about getting a loan these days, or running a credit card balance. In the old days, debt was always backed with some kind of asset — a house or a car, for example. You could always sell the asset to pay back the debt (or a large part of it). These days, however, debt is used to buy intangible things like vacations, which is a dangerous situation, because you’re on the hook for the whole debt.

Banks and finance companies make it very easy to get deeper into debt. Consumers are constantly bombarded with “introductory” APRs for credit cards. Banks offer you money to renovate your home even if you haven’t paid off your mortgage. Finance companies let you purchase almost anything using a variety of no-payment and low-payment plans.

Just because everyone’s doing it, however, doesn’t mean that you have to wallow in debt. There are many advantages to debt-free living, but perhaps the biggest advantage is the peace of mind it brings you. If you’re living within your means and you don’t have huge debt payments to make every month, you’re almost guaranteed to be living a healthier and happier life. Your family will certainly notice a change — you won’t be a grouch all the time — and so will your friends. You’ll sleep better and you’ll feel better.

It’s not easy to switch to a debt-free lifestyle, but it can be done. You start by not incurring more debt — live within your means by paying with cash and not buying things you can’t afford. Then you eliminate your existing debt by freeing up some money and aggressively paying down you debt using the “debt snowball” method.

Now avoid debt for the rest of your life. There shouldn’t be any reason to buy anything using debt, except perhaps for a house. But be aggressive with your mortgage: pay it down as quickly as you can — there’s no need for a 40-year mortgage.

It’ll take some effort to eliminate your debt, but the way you’ll feel once it’s gone will make it all worthwhile. Debt-free liiving used to be the norm, but it’s a lost art these days. Do your best to recover it!

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This entry was posted on Saturday, January 12th, 2008 at 12:49 am and is filed under Being Debt Free. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.