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How to lead a debt-free life

A life without debts is a boon. It is a state of perpetual happiness. It is also a stage where we need not fear anyone. It is a stage where we can confidently save our little money for the future. Based on a number of real world examples, some aspects of this art of leading a debt-free life are sought to be discussed in this article.


It is quite possible to lead a life without debts. It is very much a happy proposition too. It is also recommended in these days of hyper inflation and in these days of total commercialization of all relationships. It is so essential to live life the way we want and live within our means. More specifically such a debt-free life is eminently possible through and by a) having a monthly budget b) reviewing expenses at least once a week c)Looking for cheaper substitutes d) never overspend on anything and e)look for extra incomes.

Have a monthly budget

This is an absolute imperative for a debt-free life. A monthly budget will enable us to identify the wasteful expenditures. It will also help us to identify areas where we can be more careful and plan accordingly. A monthly budget can also trigger some new ideas about our food expenses, our entertainment expenses, petrol expenses and even expenses related to education of children. It will make us more alive of different possibilities of cost reduction. This process of budgeting can also be based on past experience. Some allowance for inflation also needs to be given when listing the various items of expenditure in the budget.

Reviewing expenses at least once a week

This follows from the budget. When expenditures are made, when we review the expenses with new expenses or increased expenses, it becomes easy for us to identify cost cutting measures to cope with the increased expenses and make sacrifices. It should be noted that our parents and the earlier generation prior to that, perpetually sacrificed so many life comforts and lead very healthy lives. That most did not even have any major ailment, it now turns out, was related to their food habits. However even here, they were very judicious in spending.

For instance, they would grow banana trees in the garden and use the raw banana for cooking. The stem of the banana tree is not only a very tasty item, it is also a very healthy item. They knew how to cut costs day in and day out. Talk about debts and they would see red.

Today it is still fine that we have several families who always believe in cutting costs and living within their means. For instance, a middle class family, with a monthly salary of Rs.20,000 and living in a small town in a rented house for Rs.5000/-, suddenly discovered that they would be set back by an increased Rs.600 due to increase in bus fares. Out went the weekly consumption of meat. Another Rs.400 was estimated as increase in electricity bills and petrol expenses. The family sacrificed the once-in-a-month movie expenditure of Rs.500. Not only this. The mother was so intelligent. Through her contacts, she had a deal with a lady who would come to cook in a neighbor''s house. She would order for pure organic spinach thrice a week and cut down on vegetable expenses by another Rs.300 per month. The money saved was pumped into a recurring deposit and the money that matured after three years came in handy when the elder son joined the Engineering course.

So, the art of cost cutting was complete with this family. I had advised them to start a PPF account some nine years ago. They would save something every month and deposit that small accounts into this account before the 5th of every month. The bread winner's yearly bonus was partly pumped into this as well. They would never wear cheap clothes but would pick up discount offers so that they get two shirts free for three they buy and so on. They were true middle class but never spent unnecessarily on anything. The boy also entered the Engineering college through the merit quota.

All along, the mother was the real brain behind budget, expenditure and all saving. She knew how to keep expenses to the bare minimum. They did pledge their jewels during the first two years of the son's study, but found some means to repay over seventy percent of the jewel loan, within two years. In the third year, thanks to a good increment in the salary of the father, the loan was totally repaid and the family remained debt free thereafter.

This is just one example. There were several others who were influenced by this family. The mother was too intelligent. She would pull out the folding cots and the entire family would sleep just outside the house in the summer months. They would claim that they were more comfortable this way. Then a police inspector who lived in the next house served them good, as far as security was concerned. The review of expenses was done more than thrice a week. The mother, a history graduate without any other qualification brought to use all her native intelligence. The electricity bill actually came down in the summer months.

Looking for cheaper substitutes

This sort of automatically happens in most middle class families. For example, there were situations when the aforesaid family had to cut down on petrol expenses. The father would use the bi cycle for over twenty days in a month and get to office, some seven kilometers away. He would not mind the strain. Very rarely he used the lift he got from co-workers.

As already mentioned in each of our families cheaper clothing is one method of cutting costs. This can be very much done in the case of food too. The aforesaid use of spinach is an example. Non vegetarian food can be easily substituted with healthy vegetarian food. In fact, many middle class families have already understood this game. Whenever the budget is limited, many housewives go for second grade substitutes for detergents, dish washing liquids, soaps and even coconut oils. The housewives in middle class families do show their own innovation in this area.

Living within one's means is a huge plus. The family becomes very happy as there is always a big peace of mind. We should never show off and imitate the rich. This is wasteful and is just not required. Costly curtains for example. This can be done only by the rich. The ordinary cotton curtains are available at one tenth or more prices than the rich ones.

Never over spend on anything

When we get a good bonus or merit increment, that should go only into our saving. It should not be spent on costly vacations and so on. Many families go on vacations but manage to spend very less. For example, hundreds of families stay in cheap lodges in a town called Mettupalayam near Ooty. There are thousands of buses that go to Ooty from here. The families go and see five places in a day and come back by bus to stay in Mettupalayam. In this fashion they save on costs. So judicious spending is recommended. And if this happens, a debt free life is very much possible.

Look for extra incomes

This true life case study can serve as a big motivation for many. This family in the year 1996, wanted to buy a house at a suburb called Guduvancheri, then a fairly under-developed suburb of Chennai, around 48 kilometers from the heart of Chennai city. The total cost was only five lakh and fifty thousand rupees in those days, The built up area was just 625 square foot in a total area of 1800 square foot.

The father's income was just rupees seven thousand five hundred in those days. The banks refused to give any loan more than three lakh rupees. The rest of the 1.5 lakh was through a jewel loan. In spite of this, there was a shortfall. The wife was a raw graduate but knew stitching pants and shirts. She stepped in, borrowed the rest of the money from her own brother and boldly purchased the house. The mother shifted her base to a rented facility near the new house that was being built, took up a shop for rent and started a small business. Gradually she got new contacts in the surrounding villages. Guduvancheri in those days was not highly developed.

The business gradually started looking up. Every month, she repaid four thousand to her own brother. She was able to give more on some months. Her only son got a diploma in Mechanical Engineering in the meanwhile and joined a good auto ancillary company as a trainee diploma Engineer. His salary was also used to repay the debts so quickly. After they checked into the house, the father also joined them. He joined with another person and started a small catering business that also grew over the years. Very shrewdly, the family invested in four new plots in the same area.

Today in 2018, after having repaid the entire loan within eight years, the family is sitting on a net worth of some four crore rupees.

The true inspiration came from the mother once again. She said we will go and get the house. But the real motivation was to repay the entire loan within a short time and go for fresh investments. Today Guduvancheri is one of the fastest growing suburbs of Chennai. Each of their plots is more than one crore each today.


Living a debt-free life is always possible. The aim should be to liquidate debts as quickly as possible as explained in the above case studies. A debt free life always brings sure happiness and is a sure bet for good health. Yes, peace of mind always follows. Such families can always teach many lessons to all other families.

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Author: T.M.Sankaran02 Aug 2018 Member Level: Gold   Points : 7

A debt-free life is a tension free life. Everybody likes to have such a life. But in practice, it becomes a difficult job. The main reason is that everybody aims at something beyond his capacity. One has to look into his purse before spending the money.

Once a child is born we start spending for the child in different ways. Purchasing dresses, toys, eatables etc. without looking into the purse. The child grows up seeing and enjoying these. Naturally, the child demands better things, especially when starting to play with other kids. Then the parents will be forced to get better things, that means spending more. This continues at all points in the life. The parents start to go by taking loans. The first will be for the education of the child. Like this several occasions are faced by the parents which pressurise them to take loans. Only if the parents are rich enough, the full needs of children can be met without going for loans.

Hence a systematic approach towards everything is to be followed in order to be free from debts. Children must be trained to accommodate within the available facilities. Self-discipline in financial matters also is a matter to be strictly followed. Once a loan is taken, then it becomes a practice. Hence try to abstain from that at the beginning itself.

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