Debt-Free - Live and Have the Things You Want

By: Michael Benifez..


It can be difficult to live without debt, as it has become the norm to finance cars, higher education and homes with loans and mortgages. If you think there has to be a better way, however, you may be right. You can avoid taking on overwhelming debt - or any debt, for that matter.

Transportation

Automobiles are a primary form of transportation for most of us, but even the cheapest new cars cost over $10 000, more than most people can fork over at one time.

One alternative is to pay cash for a used car. Sites like Craigslist make it easy to find used vehicles. Choose a model known for reliability, like Volvo or Honda. Verify that the vehicle inspection number on the dashboard matches that on each of the front door stickers and take the car to a reputable mechanic for inspection. You might have to make repairs from time to time, but you are careful you'll still save over financing a new car.

Travel

Some purchases seem to require a credit card, like staying at hotels or renting cars. Call around to find businesses that will accept debit cards. Be aware, however, that most companies require a hold of several hundred dollars. If your account balance is low this isn't an option.

Even if you keep a comfortable amount of money in your account, make sure funds are available to cover upcoming payments while your account is on hold. Find out the amount of the hold and treat it as an expense. When you've returned the car or checked out of the hotel without incurring damages, "refund" the money back to your self.

Some national chains are franchises and payment rules can vary by location, so to inquire about payments call the location where you want to do business directly.

Education

According to a recent U.S. News & World Report article, the cost of higher education has long outpaced inflation. In 2007 private universities charged as much as $34 000 a year. Even state schools can cost more than $15 000 a year.

Not everyone goes straight from high school to college. Why not work during and after high school to save money for college, or work while attending school part-time?

Scholarships aren't always available to people who don't stand out in significant ways. If you're not the Alabama Jiu-Jitsu champion or a breeder of rare lizards, but rather a B student who plays guitar, you'll likely pay for most of your schooling.

If your family's income is low you might qualify for need-based grants, but to increase your odds you'll have to apply to many schools. This can be time-consuming and expensive. Try to find a school that needs you. Perhaps there is a small university in another state that would pay to educate you because they aren't very competitive academically, don't have enough students from your state, and want to expand their music program.

What about post-graduate programs like medical or law school? Ensure that the cost will be worthwhile by getting experience in your field. If you want to be a doctor, work as a receptionist in a doctor's office, volunteer in a hospital or become a nurse before committing to med school. If you hate it you won't have wasted much money and effort, and you'll be closer to figuring out what you really want to do.

If you must go now, don't expect Harvard to foot your bill for law school. A smaller school might give you a scholarship, or at least cost less.

Housing

In need of credit report help? In some areas, prospective tenants must pass a credit check. This means that you need credit history, i.e. loans or credit cards. It seems unfair to have to prove your financial responsibility by incurring debt, however temporary, but not all landlords agree. Sublet from an individual who won't perform a credit check, or rent near a college. Many students don't have credit histories and landlords will be used to this.

If you want to pay cash when buying a home you may need to choose an inexpensive area to live, at least initially. Most people will never have enough cash for a home in even the suburbs of a city like Los Angeles, where homes can cost over $500 000. You can find a home for closer to $100 000 on the outskirts of other cities. This is a more reasonable goal, though still difficult. Not having to shop for a mortgage will take stress out of shopping for and owning a home, and may give you an advantage over someone who can only make a down payment.

Conclusion

Avoiding debt is not as difficult as you may think. You may not have to sacrifice anything but a place in the rat race. You'll have to go off the beaten path to live debt-free, but peace of mind and financial security is worth the effort.

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