Do you want to live debt free?  In America’s consumer culture, that may seem to be a quaint idea to some.  But as we see the number of foreclosures and bankruptcies rising, suddenly people are asking how to live debt free.

There is something wonderful about having no bills other than the ones you accrued that month.  This article explores five ways to live debt free.

1. Distinguish between what you need and what you want.  You need food, shelter, clothing, and depending on where you live, transportation.  You want a video game system, a high end stove, etc.  Even within the “needs category” there are differentations between products.  For instance, you need food, but there is a difference between been soup with a little bit of ham for flavoring and a filet mignon.  Figure out what the minimum you need to live is and put all other items in the want category.  Then, after you have paid for all of your necessities, you can purchase the things you want most.
2. Pay off your debts quickly.  When the objective is to live debt free, you have to get out of debt.  So, that means accelerating your debt repayment schedule.  If you are supposed to pay $150 a month on your credit card, cut into your wants budget and pay $250.  Even paying an extra $100 a month on your house payment can shave years off the amount of time you need to pay.
3. Learn strategies to live frugally.  Make it a game.  If you are used to spending $150 on family groceries, budget $125.  You’ll learn to buy generic, buy cheaper cuts of meat, and learn to do without expensive pre-packaged food.  You will also find that you are looking for creative ways to prepare food which could lead to tasty new recipes gracing your menu.  Learning to live frugally can actually bring a lot of fun into your life.  That’s one of the advantages of learning how to live debt free.
4. Put away money for emergencies.  One of the reasons that people get into debt is because of an emergency.  For instance, an unexpected surgery can put you back $500 to $1000, even if you have health insurance.  If your car engine blows, you could end up needing to put a couple of thousand dollars into the vehicle.  So, having money for a rainy day is an important step on the live debt free lifestyle.
5. Teach your children good money habits.  One of the advantages of a debt free lifestyle is that it teaches your children good money habits that they will take into adulthood.  Don’t teach them deprivation.  Instead, show them the benefits of being debt free.  Because you are not paying costly interest payments, you actually live better than you would if you bought everything on credit.  Make sure that your children see the benefits of your live debt free lifestyle.

So, those are five tips on how to live debt free.