Ijeoma Kola smiling sitting at restaurant with laptop and credit cards in hands - clear debt

How to Live a Debt-Free Life

I’ve lived a debt-free life my entire life, meaning I have NEVER owed anyone any money. Now I recognize that I was setup for success in some ways, but I’ve also made a lot of smart financial and personal decisions to maintain this lifestyle. It’s 2021 y’all and we stay walking away from debt and we’re going where the money reside! There are definitely ways to stay on top of things when it comes to managing your money and staying clear of debt. So if you’re interested in how I’ve managed live debt-free in my student and working life, keep reading.

Firstly, a great starting point is to understand the different types of debt that can be incurred. Let’s start with secured debt. This type of debt requires collateral and can lead to your assets being seized, for example your car loans and mortgages. On the other hand, unsecured debt, such as credit card and medical bills, doesn’t require collateral. With revolving debt, like a monthly gym membership, you can borrow repeatedly though there is a maximum limit. And finally non-revolving debt, such as student loans or business loans, cannot be used more than once. Now how to not be overwhelmed by all of this?

Automatically Organize & Keep Track of Your Finances

How are you going to make financial decisions if you don’t even know where the money reside?! However you decide to spend and save your money, something that really helps is keeping an inventory to track it all. If old school spreadsheets and pen and paper aren’t your thing, apps like Mint or Wave do a really good job of automatically categorizing your assets and expenses. Being aware of exactly how much you have and how much you owe and understanding how you handle your money makes it so much easier to stay financially organized and clear debt from your life.

Reduce Student Loans (especially for graduate education) by Getting Scholarships

We all know how expensive studying can be. So to work your way out of student loan debt, you can, like me, take the time to actively search and apply for scholarship programs to fund your studies. Are you looking to pursue a PhD? While you’re considering the various schools you want to apply to, make sure you explore any fully funded doctoral programs that can help lift the financial burden of your research. Also if you or someone in your family works at a university, look into potential tuition remission programs that might be available for you. Some corporations also offer tuition remission — if you gotta switch your job as a way to guarantee tuition remission, then start hustling!

Minimize Credit Card Debt by Treating Credit Cards Like Cash

Now I must point out that I BELIEVE IN CREDIT CARDS! As long as you treat your credit card like cash and pay it off every month, you’re guaranteed to not get overwhelmed by the debt that comes with overspending. If you’re at all like me and consider yourself a globe trotter, get a travel rewards card to book your flights. I certainly have mine ready for when the world opens up again! Another handy tip is to get a new credit with a large signup bonus when you’re about to make a major purchase. When my website was being redesigned, I got a new business credit card because I knew it was a large expense and I wanted bonus points. Remember — I had the money to pay for the service, so I didn’t use the credit card to delay payment, I simply used it to earn additional points!

Supplement Your Income For Large Purchases Instead of Financing

How many times have you wanted to buy a new computer and decided to put it on a credit card to pay off later? Rather than using credit cards as financing tools (remember, we treat them like cash now), think about how you can temporarily boost your income to come up with the amount of money you need for a large expense. Obviously sometimes we have emergency expenses (our computer crashes) and we need a quick solution, but for planned purchases — clothes shopping, vacations, holiday and birthday present shopping, wedding planning — think ahead and work a few more hours, do a couple of odd jobs, or sell some things to earn additional income. I’ll do a separate post on ways to earn extra income, but I’m sure you can start thinking up a few ideas on your own!

What are some of the things that you do to manage your money and try steer clear of debt?

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  1. Good advice! The credit card suggestion was great. I’m not in school or pursuing any educational programs but scholarships are great. I did apply for one scholarship in school and I received it. Scholarships are great. Since, I’m not working as of today. I’m not securing any debt. I’m looking to start a business one day and I will keep these 💎 in mind.