You Can Pull Off A Zero Debt!

In this day and age, there are only a handful of people in this country that do not own a credit card

. In fact, an average citizen can have two to three credit cards. Debt is not all bad. It is how one mismanages his credit card debt that becomes an issue. In fact, latest figures showed that credit card companies earned more than $17 billion in a year in interest charged to card owners.

Knowing and pulling off a zero debt is not an impossible feat. Some may find it difficult, but the first step to getting financial independence is to be in the know. Debt is defined as money you own a person or organization. When one speaks of financial independence it simply means handling financial obligations without assistance from anybody.

To know if you have achieved a zero debt, look at your debit versus your credit level. In financial terms, money that you have in the bank, or probably even "cash on hand" can be considered a debit. If you have a low debit level, while your credit level is quite high, then you still have a long way to go before attaining a zero debt. It does not mean though that it cannot be done. If you want to know how to you can reach this state then read on.

First, carefully look at your financial activities. This means knowing how much money you have and earn plus what are expenses you have. The money you have in the bank, income from your job or business in a given month is regarded as your debit. You need to establish how much money or your debit comes in at any given month.

With these, you then need to examine how much you normally spend by listing down all your expenditures, like food, rent, gas and the likes. These are considered as credit. By listing all your expenses, you can also evaluate which ones are needed and, which are considered "wants". If your credit level is higher than debit, then cutting on your "wants" is necessary until your credit and, debit ratios are down to a reasonable level. For instance, you can do without fine dining, spa or a shopping spree for a while. Abstaining from these little luxuries can go a long way in order to achieve zero debt.

Apart from taking note of your expenses, it makes sense that you know how much debt you have. This may sound more like common sense, but a lot of people admit to having no idea of the exact amount they owe. If you know how much loans you have, down to the last centavo, then you would know how much of your monthly income you need to set aside to pay for them. Managing your debts would help you steer clear of more charges such as interest rates and late fees. Lastly, if you can, avoid using your credit card for any unnecessary expense.

It takes a lot of discipline and will power to do all these simple steps. However, if you develop these habits, you are well on your way to your financial independence.

by: Allen Jesson

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