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I hate debt These practices have allowed me to minimize my stuff.

Key Point

• Accumulating debt means throwing money away with interest.
• I prefer to maintain these habits rather than doing so.
• Living below my means, sticking to a budget, and having an emergency fund are the cornerstones of my financial success.

Some people don’t mind having debt, or rather just accept it as a necessity. But debt is something that has always bothered me. Certainly, paying interest on a mortgage gives you peace of mind, especially since mortgage rates are so low. But the idea of ​​paying interest to the credit card company makes me want to pull my hair out.

Therefore, I have always tried to avoid debt as much as possible. And maintaining these specific habits helped me avoid debt, even when things didn’t always go so well financially.

1. Living below your income

In my twenties, I had a high-paying job in the financial industry. Nonetheless, I had a cheaper apartment than most of my friends, so I made a point of packing lunch for work most days instead of buying it.

What has helped me avoid debt over the years is that practice of living below my means. No need to reach for your credit card. cause? I don’t use all my monthly paychecks, so I have room for unplanned expenses with that money.

2. Stick to your budget

A lot of people I know spend money on different expenses each month, but in the end they don’t know how much each expense will cost individually or how much the bill will all together be Frankly, it’s not a great way to operate.

I try to stick to a budget, so I can see where my money is spent each month and what it costs in each expense category on my list. This allows me to live beyond my means and to wiggle out for unexpected expenses.

There are various budgeting apps available today to make the process easier. I’m rather old school, so I manage my budgets in a spreadsheet on my laptop. However, there is no right or wrong way to proceed with the process.

3. Have an emergency fund

I try to keep track of my expenses and make sure I don’t run out of my monthly paycheck, but unexpectedly large expenses arise and the rest of my income doesn’t always cover them. But even in such situations, you can avoid debt by maintaining a solid emergency fund.

Some financial experts will tell you that you should keep 8 to 12 months of essential living expenses in your savings account. I like to stick to the high end of that range, so if something big happens you’ll be covered.

For example, both this year and last year, two A/C units in my house stopped working and had to be replaced at a cost of thousands of dollars each. If I hadn’t saved, I would have ended up in a huge amount of debt. But thanks to my emergency fund, I avoided that fate.

In some cases, a large amount of debt may be unavoidable. But if you want to do what you can to eliminate debt, it can be beneficial to start living below your income, stick to a budget, and build a cash reserve that’s available in a pinch.