Saving: They Key To Debt Free Living

Saving is becoming an extinct practice for many western countries including Australia and America

. Until the recent economic downturn, people were spending everything they made without thinking about the consequences. What's even worse is that they were borrowing money to finance their expensive lifestyle and shopping habits.

Once the economy started tanking, it didn't take long for people to start losing everything that they owned. Such loss is tragic and needless. If people had saved when times were good, they could have kept everything and weathered the recession without mishap.

If you're like most people, you finance your life with credit spending. Everyone is guilty of it. Even our government is not much of a role model when it comes to staying debt free. Unfortunately, credit spending only makes you feel nice and comfortable temporarily. Inevitably, it all comes crashing down eventually.

Saving, not spending, is the key to debt free living. The following examples will help put it all into perspective for you:

* It will take 63 months to pay off a credit card with a $2,000 balance and 19% APR providing that you pay $50 a month every month and you are never late. This means that you will end up paying $3,150 for $2,000 worth of merchandise. If you save $50 a month, it will only take you 40 months to purchase $2,000 worth of merchandise outright. After 23 more months, you will have another $1,150 to spend instead of nothing.

* A $100,000 mortgage with a 5.75% interest rate will cost you $101,143.69 in interest payments. And it will take you 28 years to pay off your loan. If you save, $50,000 for a down payment, you will save more than $87,000 in interest, and your home will be yours after 9 years.

As you can see, saving up saves you a lot of money. Not only is it cheaper to live using a saving methodology rather than a credit one, it is safer. No one can come and take your belongings because you fail to make a payment. If you lose your job, you get to live in the same nice house and drive the same nice car. Your lifestyle is not threatened in the least bit.

Take a moment to think about how different your life would be if you were debt free. You would probably be able to afford a much more luxurious lifestyle than you do now. You could probably afford to go on vacation and do more things with your family. You see, you don't need to get a better job, you just need to change the way you spend the income that you have.

To change your lifestyle, all you need to do is stop buying things on credit. If you can't afford to purchase something outright, save up for it. You will find that you appreciate things more when you have to wait for them. Additionally, buying on credit often results in resentment after the bills start rolling in.

by: Dan Cavalli

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