5 Tips to Live a Debt Free Life and Become Wealthy

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The following is a guest post.

While money is not the most important thing in the world, still most people will agree that lack of it can make life really tough. After getting married and having kids things can become more complicated, since your financial needs will grow.

Research says that financial problems are on the top of the list of reasons for divorce. This doesn’t mean that you will get divorced if you have financial problems, but it only means that you should pay attention to that serious problem.

In this post I will tell you about five tips that will improve your financial situation and help you get out of debt.

5 tips that will help you become wealthy

1)      Live below your standard:  Ask any billionaire you can reach out there how he collected his money and he will tell you that one of the keys to making money is living below your standard. Living below your standard means buying a small car when you can afford to buy a big car. Buying a big car when you can afford to buy a bigger one. And buying an expensive car when you can afford to buy a private jet!

2)      Invest: You might be wondering, why would a person live below his own standard? Life won’t be joyful after all. The answer lies in the second point which is investing. When you live below your standard you will have an extra amount of money to invest. When you invest your money correctly you will start to get additional income that will enable you to buy the things you need.

3)      Never finance a lifestyle: Debt is ok as long as you put the money in the right price. It’s completely ok to get a loan to start a new business but it’s not right to get a loan to buy a new car. In short, financing your lifestyle should never be done through debt, else you will never get out of the debt cycle. When you finance an investment, you are very likely to get out of debt and even make profits, but when you finance a lifestyle you will only accumulate more debt.

4)      Have more than one source of income: Warren Buffett, one of the richest people in the world, said that the best thing you can do for yourself is to have more than one source of income. I know your time is limited so don’t get me wrong. You don’t have to do 2 things at the same time but you just need to make sure that you make any other good investment that can bring you profits in addition to what you do for a living.

5)      Start a low risk, high return project: Thanks to the internet, the old risk/return model has become obsolete. Earlier you had to invest a lot to earn a lot. Today you can start a low risk business such as a website, then make lots of money out of it. With an investment that is as low as 250 dollars/year, some people make thousands of dollars each month. It’s the internet age! Why don’t you give it a try?

 

Farouk Radwan is a full time blogger who makes a living through his personal blog. He is the founder of www.2knowmyself.com a website that helps people understand themselves in a better way.

 

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29 thoughts on “5 Tips to Live a Debt Free Life and Become Wealthy

  1. Those are the most basic and most important things about financial planning. Anyone who practices the above principles would retire rich

  2. I know so many people who “finance a lifestyle,” as you put it. They’re desperately trying to “keep up with the Joneses,” even though they really don’t have any clear idea who the “Joneses” are!

    Both my parents and my in-laws lived well below their means as my husband and I were growing up, so we learned a lot of their frugality by osmosis!
    Elizabeth @ Broke Professionals recently posted..Perfectionism On The Job: What It’s Costing YouMy Profile

    • I used to try to keep up with the jonses. Having rich neigbors who had everything I used to try to keep up with them until I went off to college and realized that it didnt matter anymore. I was trying to pretend I was someone who I wasnt. I did finance some of it with debt, but the rest was working my tail off over the summer.

      I need to convince my wife to live a frugal lifestyle she never had much as she was growing up and now that we both work she is in the i need everything phase. It has been killing me lately!
      Christopher @ This That and The MBA recently posted..Groupon, April fools gone bad?My Profile

    • thank you michelle : )
      i borrowed it from Warren Buffet, one of the richest people in the world, in his book the intelligent investor he mentioned these point more than once

  3. I don’t think you can’t scream #4 loud enough for most people to hear. Having multiple streams of income is critical!

    If you only have one job or business & that income goes away- you’re totally screwed. If you have several income streams & one goes away- you can focus on increasing income from one or more of the others to make up for the loss.

    Great tips.

    • so right dave
      and even if the income stream didn’t disappear
      you will live your life worried about losing your only source of income!

  4. I’m starting to see the importance of having more than one source of income. I really cant get another job except for my blog while I’m in school without burning out, but as soon as I’m out I plan to get a second job or find a side hustle.
    Daisy recently posted..April GoalsMy Profile

  5. I could have done a lot better with # 3 financing a lifestyle. I went out and got a big car loan just because I thought it would fit into my budget going forward. If it wasn’t for those big car payments, I would’ve been much better off financially. I guess that also ties in with #1 living below your standard.
    Modest Money recently posted..Early April 2012 Modest Money UpdateMy Profile

  6. Hi Farouk,
    What a nicely-written article with great tips and examples!
    Same with Jessica, I also wish that I’ve learned about investing in my youth. I used to think that it’s only for the wealthy and out of reach of ordinary people.
    How wrong I was but I can’t get back the time and money wasted. What I can do is to make a start and share what I’ve learned with my kids so that they’ll do better.
    Theresa Torres recently posted..Student Guide to Credit CardsMy Profile

  7. A friend of mine got into some major debt! Simply by following the point that you made about ‘never to finance your lifestyle’ he went out and took a loan out to buy a new car and new furnishings for his flat. Which put himself in a terrible position, thankfully he saw a financial advisor which helped him get on top of his debt, but a warning to everyone none the less!

    Michael
    Debt Recovery recently posted..The Credit Services Association (CSA) launch a new brand identityMy Profile

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