How To Never Get Into Debt Again

stay out of debt

After getting out of debt, Mary and her husband are now in a better financial position than ever before. They moved to a new state with a lower cost of living, had two children in five years, rented out their old house in Chicago, bought and sold a second home, and were able to buy their “dream home” after saving up for a 20 percent down payment. “It’s taken us over 8 years, but we were eventually able to reduce our debt entirely and we no longer owe anything except the mortgages on our two homes,” said Mary. “We’ve stayed out of debt because we stopped buying things we couldn’t afford. Plain and simple. If we know we can’t pay it off the next month, we don’t charge it. Having two children in the last five years provided extra motivation to stay on track. It wasn’t just our own financial futures on the line, but now we knew that our children’ quality of life depended on our decisions.”

Saving For The Future

thinking about the future

Mary and her husband are now dedicated to saving money for the future. They take full advantage of the retirement plan and matching savings offered by Mary’s employer and they have set up Roth IRAs and college savings plans set up for each of their children as well. In addition to long-term savings for retirement and their children’s future college educations, Mary and her husband have set up a money market savings account with automatic deposit from their checking account each month. “This is our liquid savings,” said Mary. “If we want something, we dip into that savings as needed—nothing goes on a credit card if we can’t pay it off in full the next month. We’ve been very intentional in cushioning this account so we have access to one full year’s salary if needed.”

Limited Credit Card Use

save and travel

Mary and her husband still use credit cards, but they only have 2 major credit cards and no more department store cards. Mary says that they only use credit cards to help earn rewards points to take vacations. “Those cards provide us with travel points that we use for family vacations,” she said. “But speaking of vacations, we haven’t been on a major vacation in years. We only go on weekend getaways and try to research everything in advance to get the best deal on hotels (using our credit card travel points), restaurants (using daily deal sites like Groupon), and admission to attractions. Travel can be done cheaply if you plan ahead.”

You Deserve To Be Debt Free

A lot of people think that getting out of debt requires unpleasant sacrifices and living with less fun and a less fulfilling life than you “deserve” – but Mary’s story proves that it can be done without giving up anything important. “We’re better positioned now than I ever imagined we could be and it’s a direct result of creating a plan and sticking to it,” said Mary. “We didn’t really sacrifice anything major along the way, we just got better at recognizing needs and wants. We’re less impulsive than a lot of our peers and we try to save for everything we want. We’ll make it to Disney World within the next two years, we’ll gut our kitchen and redesign it within the next three years and we’ll go on another honeymoon one of these days, but only when we can pay for it with cash.”

Mary’s story is truly inspiring and should be used as a model by other American families that are working to get out of debt. Debt is not mysterious or complicated – it’s simply a matter of learning to spend less than you earn, and making sure that the numbers are going in the right direction each month. Before long, months become years, and your family will enjoy true financial security and freedom that is more precious and valuable than anything money can buy.