10 Ideas for Living a Life Without Credit or Debt
People with no debt tend to be the exception rather than the rule. Between mortgage loans, credit cards, student loans, and car loans, it's not uncommon for the typical American to have one or more types of debt.
Feutz also says it's not always mathematically optimal for people to live without any debt whatsoever – but it's not an inherently bad thing. In fact, going about your days 100% debtless is definitely the most sure-fire way to ensure you won't overextend yourself into a bad financial situation, Feutz says.
5 steps to live a debt free life
When you have no debt, your credit score and other indicators of financial health, such as debt-to-income ratio (DTI), tend to be very good. This can lead to a higher credit score and be useful in other ways.
Kevin O'Leary, an investor on "Shark Tank" and personal finance author, said in 2018 that the ideal age to be debt-free is 45. It's at this age, said O'Leary, that you enter the last half of your career and should therefore ramp up your retirement savings in order to ensure a comfortable life in your elderly years.
What It Feels Like To Be Debt-Free. Paying off your debt is incredibly freeing. It eliminates all of the worries and side effects that debt can bring. And it gives you a sense of security that comes with the fact that you don't owe anyone anything; your choices can be completely your own.
While it may feel great to be debt free, it can actually hurt your credit scores. ... Carrying some debt will help you maintain good credit scores since the current scoring models prefer to see some payment history on several open credit cards with low or no balance showing you are responsible with your money.
It means that you do not have to worry about payments or what would happen if you were to lose your job suddenly. It can be revolutionary to think about living debt-free. A life without payments is very different from one with payments. Debt-free living means saving up for things.
Without any debts to worry about, your monthly expenses will drop, freeing up your personal cash flow and allowing you to focus on savings and daily living expenses. Few people understand just how free you can feel when you're no longer beholden to a slew of banks and lenders.
This can help you save some money on interest payments as you pay down that debt over the course of the year.
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