Friday, April 13, 2012

The main reasons to continue with a frugal lifestyle even after repaying your debt

The word “frugality” carries different meaning for different people. While for some, it may mean financial restraint, others take it in a light manner. The reason behind this is that, a lot of people still face trouble in switching over to a frugal lifestyle. They feel that in doing so, they’ll be keeping themselves away from the best things in life. As they’re toiling hard, they think that they deserve to enjoy all the comforts of the world. However, they forget that life is unpredictable, and unrestrained expenditure may cause them to get trapped in the vicious cycle of debt. Under such situations, they’ll obviously look for ways to get some debt relief.

While solving their personal debt problems, people often think that being frugal doesn't really need to be a lifetime strategy. They think that if you hold a massive debt amount that needs to be eliminated, you might just have to make use of discount coupons and trim down your entertainment expenses until your debt is paid off. Once you’ve eliminated your debt, you can return to your previous lifestyle. However, this could be a dangerous step, since this could well take you back to debt. Following are a few important reasons to carry on with a smart, frugal way of life. 

Emergencies

When you struggle to pay off a massive amount of debt, the last thing on your mind would be to set up an emergency fund. However, you can never ignore the importance of having this fund. Whether it’s a job loss or sick leave, you’ll always need money to meet your daily expenses. Under such circumstances, this emergency fund will surely prove to be quite helpful. Although the amount of your emergency fund will be based on your capacity, it’s advisable to have no less than three month's worth of living costs set aside. As soon as you get your paycheck, consider saving at least a minimum amount for your future.

Retirement

One of the most important reasons to carry on with a frugal lifestyle is to maximize your retirement savings. Under the present economic situations, it’s really difficult to settle on the amount that you’ll actually need for those golden years of your life. In case you’ve just completed your debt repayment process, it’s advisable to set aside the cash that previously went to credit card interest in a separate retirement fund. Once you’re done with that, you may probably loosen up and spend a little more generously.

The future

When you lead a frugal lifestyle, you’ll naturally be able to save more money. Hence, this saved amount will make your future easier to handle, no matter what happens. Whether it’s marriage, paying college fees, travel, having kids, or even divorce, you never know what future has in store for you. You’ll require money to fund both planned and unexpected life incidents proficiently, and having the capacity to do so without accumulating debt is the key to a hale and hearty financial life.

1 comment:

Casey colette said...

Dropping by from the Blogs Doc of the Coppertone Moms group! I am also a member! What a cute blog and button! Visit me if you have time. Xo!~ Casey C