Live Free By Living Free Of Debt

If you're not sleeping well at night, you probably have a lot of debt. Owing money is one of the biggest causes of stress-induced insomnia. Becoming debt-free is the only way to reduce that stress.

How to live free of debt is not a topic that most banks will discuss with you. After all, their bread and butter derives from the interest they make from loans and credit cards. If no one borrowed money from them, their business model wouldn't work at all -- they need consumer debt to make money.

That's not going to happen, of course. Debt is now firmly ingrained in our culture. People hardly think twice about getting a loan -- or running a credit card balance -- in order to purchase things to make their lives easier. It used to be that most debt was backed by some kind of security -- houses, cars, investments -- but nowadays debt is being used to fund intangibles like vacations. This is a dangerous situation, because there's no asset to sell that can be used to pay off (at least partially) the corresponding debt.

Banks make it easy to acquire debt, of course. They send out low-rate credit card offers all the time. They offer to extend you a line of credit for the equity you've built up in your home, nevermind that you haven't even paid off the mortgage yet. Finance companies do it, too, offering no-interest or reduced-interest payment plans for buying cars, furniture, vacations, etc.

Just because everyone's doing it, however, doesn't mean that you have to wallow in debt. There are many advantages to debt-free living, but perhaps the biggest advantage is the peace of mind it brings you. If you're living within your means and you don't have huge debt payments to make every month, you're almost guaranteed to be living a healthier and happier life. Your family will certainly notice a change -- you won't be a grouch all the time -- and so will your friends. You'll sleep better and you'll feel better.

Going debt-free isn't easy, of course. The first thing you need to do is to eliminate your current debt, which involves two steps. Step one is to stop increasing your debt -- start paying for things using cash and stop buying things you can't afford. Step two is to free up some money to start aggressively paying down your debt using the "debt snowball" method.

Once you're debt-free, stay out of debt for the rest of your life. The only exception is your house, since it's nearly impossible to buy a house these days without a mortgage. But do everything you can to pay off the house in a short a time as possible.

Debt-free living used to be the norm, but not anymore. Very few people realize how liberating it can be, however. Do your best to rediscover this lost art!

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