In January, to help you with your New Year’s money resolution, we did a month-long Four Principles of a Debt Free Life Series! We covered each of the four principles we wrote about in 4: The Four Principles of a Debt Free Life. Today’s article is a recap of the whole series in one place for your convenience.
4 covers what we learned personally and professionally about getting out of and staying out of debt after we paid off $51,000 in credit card debt. Each week of the series, we discussed the highlights of each of our four principles and gave our listeners free tools to help you master each of the four principles.
Debt Free Principle One: Be Money Conscious
This principle is uniquely interesting because when we wrote 4: The Four Principles of a Debt Free Life, we thought we coined this term. It initially meant to us being clear on how much money we earn, have and spend. It also meant having an understanding of the economy and how local, national and global economics affects us.
It wasn’t until after we published 4 that we read Napoleon Hill’s, Think & Grow Rich. In his book, Hill talks about money consciousness on a metaphysical level. The results on both a practical and metaphysical level produce the same results, as Hill says, “only those who become money conscious ever accumulate great riches.”
On this podcast, we discussed several tools to help you become money conscious, including our free eBook, Do You Know How To Be Money Conscious? You can download your free copy of Do You Know How To Be Money Conscious? here.
Debt Free Principle Two: Live Below Your Means
Live below your means sounds outdated, but it’s critical to getting and staying out of debt and achieving financial success. On this Queer Money, we talked about how this principle affects everyone – rich and poor, black and white, gay and straight and everyone in between.
Live below your means is such a powerful principle that it brings down many seemingly successful people. We shared examples of celebrities who famously lost all their riches because they didn’t live below their means.
We shared keys we learned about how to live below our means while we paid off our $51,000 in credit card debt. We discussed several tricks to help you start to live this principle.
It wasn’t until we respected this principle that we turned our financial lives around. To help you master this principle, we made our Spending Analysis Worksheet downloadable for free. Once you complete this worksheet, you’ll get your spending in line with your financial goals.
Debt Free Principle Three: Cash is King
The week we covered this principle, we talked about the benefit of switching to a cash-only lifestyle and how doing so gives you a 20 percent raise. The cash is king principle provides practical benefits. Studies show that people who use only cash typically spend less and pay less in interest fees.
When we had $51,000 in credit card debt, we were paying $10,000 annually in interest payments. That’s the cost of a few nice vacations or a contribution to a down payment on a home. When we paid off our $51,000 in credit card debt, we gave ourselves a $10,000 raise. This dramatically improved our quality of life.
One of the ways we managed our “all cash lifestyle” was to use the traditional envelope system. Luckily this the 21st century and you can use the app version of the envelope system by using our affiliate Mvelopes.
Debt Free Principle Four: Have a Financial Plan
Just like you can’t drive from New York City to Los Angeles without directions, you can’t achieve financial goals without a financial plan. This includes knowing the starting point of where you are financially and the ending goal of where you want to be financially.
On this Queer Money, we talked about how we created and why we have a financial plan. We discussed the benefits and the risks of not having one. Along with this week’s free tool, we covered other tools, such as investment accounts and ways to increase your income to help you have a plan.
We share how it wasn’t until we knew which direction we wanted to go with our financial lives and our lives in general that we could go from a negative net worth of $10,000 to a positive net worth approaching $500,000. Therefore, you need to have a financial plan.
We, also, dispelled the myths that creating and maintaining a financial plan is hard and limits you from enjoying life. As we’ve learned, our budget and financial plan help us do all the things we want in life without the burden of debt weighing us down.
To help you master this principle, we made our eBook, #MoneyConscious Financial Planning Guide: 12 Steps to a Richer You, available for a free download.
That’s the entirety of this debt free series. Whether you prefer to read blogs or books or listen to podcasts, hopefully, you have the tools you need to start to become debt free today.
More articles for you:
- 7 Habits to Make Your Day More Efficient & Money Conscious
- 3 Easy Steps to a Financial Plan
- 3 Big Money Mistakes and How to Fix Them