Are you floating about in a pseudo lifeboat, drifting on a menacing sea of debt? If so, then you are certainly not the happiest person on earth. Nonetheless, most people accept this kind of life as their destiny. They don’t question it and refuse to accept the fact that a life without debt is something more than a utopian thought. Actually, they are wrong. A blissful debt free life is within your reach. You only need to live smart to stay away from debt. Here are some tips that would help you to achieve this.

Budgeting-the first step to financial freedom

Budget is a universally hated word. We materialistic human beings have never been too comfortable with financial restriction. However, a budget can be an extremely effective tool to stay financially sound. With a budget, you can list all your expenses and allocate your money according to your priorities. Here it is important to distinguish between your basic “needs” and “wants”. Include your “wants” in the list of expenses only if you can afford it. Remember that pleasure is as good as misery if it brings debt along with it. Budgeting will help you to strike a balance between your needs and wants. Consequently, you will be able to spend according to your means.

Credit cards-a serious threat

FreedomUnfortunately most people cannot use a credit card responsibly. Credit cards are a license to spend according to your wish and more than often you become a victim of spending what you do not have. The solution to this problem is using cash. When cash it not an answer to your requirements, use debt cards. That way you will at least not overspend. Remember that credit cards are the root cause of trouble for 90% of the people who are suffocating under the rib crushing pressure of debt.

Emergency Fund-a smart way to save your neck

Life is a rather unpredictable thing. Here you stumble across unforeseen emergencies when you expect it the least. Can you encounter unpleasant surprises like medical emergency or loss of job with sufficient ease? If not then it might be time to build a rainy day fund. It will make sure that when you need a lump sum at a short notice, you will not be compelled to borrow. So start building an emergency fund from today even if the amount you contribute is really small. Over time, this sum to grow big enough to rescue you from financial crisis.

Investing money-a wise decision

When you use credit cards, you are paying interest to the company. The interest charged eats your money. Now it might be your turn to get interest through investment. Investing money can reap you great benefits over time. The magic of compound interest will make your money grow and this will assure you a secure future. Investing is particularly beneficial to young people who have time on their side. Trying your hand at the stock market is also a good idea which can earn you great returns in a short time. However, you must understand that this requires adequate knowledge of stock market and playing according to your means. Otherwise you might be inviting trouble. Check out Excess Return to learn more about investing and download the free ebook, if you are in the USA you can also download this free IRA ebook to get you started.

Frugal living-an underrated concept

You certainly do not need to live a wretched life to evade debt. Just don’t be extravagant just try to cut expenses wherever possible. How badly do you need the premium internet package? Will it really hurt if you shop around a little to find which store offers the same product at a lesser price? You can certainly talk a bit less on your cell phone, can’t you? If you consider the expenses individually then they might not look threatening but they will look scary when they sum up at the end of month. Costly pleasures like cars also push you towards debt. If you are not extremely well off then consider a second hand car in a satisfactory condition rather than taking a loan to buy a brand new car. 7 Creative People Who Are Living for Cheap/Free.


Being free from the shackles of debt is a liberating experience. You have every right to feel and enjoy it. So keep in mind the above things and make sure that you manage your finances as well as your life in a responsible manner.



Ray is an ex-financial adviser and the founder of Financial Highway. Currently working in the financial industry and working towards completing his Chartered Financial Analyst, CFA, designation.