I think the question, "How do you live debt free?", is equal to the question, "How do you get debt free?" I've found, that people usually don't set out in life to be debt free. They typically desire to be debt-free when they have acquired a mountain on debt.
My husband and I began working to live debt free when our 3rd child was born. By that tie, we had car loans, school loans, credit cards and other revolving accounts. We had only 1 income coming in the door and a lot of bills to pay. One day I just had enough and said, we need to lay out a plan and work towrds getting rid of all this debt.
I sat down and figured out what we could realistically do to reach our goals. First off, we deferred all our student loans. I decided to sell both our cars and with the profit, after paying them off, buy 1 used car. This took some time, but luckily, we were able to sell both cars. We were able to pay off one in full and most of the other. I made a payment plan with the finance company for the small remainder. We bought a car that fit our family at the time and we were set in that area. In the mean time, i tried contacting companies that help you reduce your credit card debt, but they told us that we didn't have enough debt for them to help us. What I had to do was close out all our credit cards so fees and interest didn't continue to accrue and pay 10% of the debt each month. In addition to these things, we canceled our cell phone plans and sold the phones.
It took a lot of time to work through all these things, but after about a year of working on them, we were debt free. Sure, our credit took a few hits from closing out credit accounts and the late payments that were made prior to putting our plan into action. After another year or so, I pulled both of our credit reports and began writing formal letters to the companies that were listing duplicate accounts, out-of-date accounts and so on, having them remove their debt and raise out scores. Some did leave their debt on the report and listed the status as "Paid". Which I found it, by law, they have every right to do.
When we had our 4th child, we needed to replace the car with a van. And with a tax return and the sale of the car, we were able to buy one outright. Just recently, we have gotten cell phones again. We didn't sign any 2 yr. plans or anything like that, so we have flexibility with them. We still do not have any credit cards and have been paying on our student loans.
Overall, I'd say it was very hard beginning the debt-free process. The outlook of being over the top of the debt mountain seemed so far off, but now we basically are there. We have 5 children, 1 income and have been thriving more now than we did when we had 2 children.
I'd also like to say that to remain debt-free and able to live comfortably, we adhere to a strict budget. If I need to go to 4 stores to grocery shop for good deals, then thats what I will do. I have no problem buying store brand items and buying things on clearance and on sale save us tons of money. Pinching pennies here and there really do add up. And it leaves us with money left over for a rainy day!
Has your family gone debt free? Are you working on it? Even thinking about it? I'd love to hear from you!
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