The Reality of a Debt-Free Lifestyle
Living a debt-free lifestyle may seem like a dream, and while it has its perks, it's not easy to achieve or maintain. It takes discipline.
An inside look at debt-free living is kind of like getting a glimpse inside Monica's secret closet (IYKYK). It appears to be perfection... until you peek behind the curtain, or door. Here's what becoming debt-free really looks like.
Sticking to a budget
Unless you're extremely wealthy, a debt-free lifestyle likely requires following a strict budget. And you probably wouldn't be reading this if you were extremely wealthy.
Regardless of the budgeting approach you take, you'll need to start by listing out all of your income and expenses and subtracting your total expenses from your total income. Maintaining a debt-free lifestyle means that your total monthly expenses won't eclipse your total monthly income. If your expenses are higher, you need to see where you can cut costs or you'll fall right back into a cycle of debt.
If you're in the black, whatever's left can be distributed however you'd like—make a big purchase or pad your emergency savings. The world is your oyster, within reason.
Different budgeting systems will have different ways to break down your spending. Whether you choose the zero-based budget, 50/30/20 rule, envelope system, or traditional line-item budget will depend on your financial goals.
The 50/30/20 rule, for example, accounts for paying down debt, so if you're still working toward becoming debt-free, this could be a good option. This approach allocates 50% toward your wants, 30% toward your needs, and 20% toward your savings and/or paying down debt.
Frugality, to some extent
Everyone has that friend who has alligator arms, struggling to reach for their wallet. Maybe they're cheap. Maybe they're selfish. One thing they're probably not is in deep debt.
Maintaining a debt-free lifestyle means maintaining some level of frugality. That doesn't mean you can't buy your friends a round of drinks every once in a while (if it fits within your budget). But you're probably not going to swipe your black card on a round of Rome de Bellegarde (Google it). Frankly, it likely would put you over your credit limit.
Living debt-free comes down to being responsible with your finances, living within your means, or maybe even slightly below, and always prioritizing your needs above your wants. You're not going to find your debt-free friend eating instant ramen every night but driving a car they can't afford.
Self-control and the ability to say no
"I see it. I like it. I want it. I got it." -Ariana Grande and your friends in debt, probably.
People who don't have debt are great at practicing self-control. And, like your mom when she used to take you to the grocery store and you'd beg for candy, they know how to say no.
This discipline means consistently paying your bills on time every month and making sure you can really afford something before clicking order, even if it means holding something in your cart for months on end.