Zero debt is a situation that means financial freedom for an individual. Freedom from any kind of outside financing like a loan, debt, or debt consolidation; in other words it just means that the individual is free from any financial obligations to third parties.
People obtain loans from financial institutions and banks to meet their urgent financial needs. But at some point they fail to pay the monthly sum due and hence, become debtors. Their debt keeps on increasing until they finally file for bankruptcy. This is a permanent black mark on their profile and wherever they might go for any form of help, it will rear its ugly head. So getting zero debt is a major issue for those who are into debt and debt consolidation.
So what determines zero debt? It is determined by the credit ratio. Assets minus liabilities will show if there is a surplus or deficit in your financial status. If your assets are higher than the liabilities, then you're debt free – ie, you have zero debt. But, when the latter is higher than the former, then the problem of debt and debt consolidation starts. So, how to maintain a zero balance? By following simple but effective steps you can become be 'zero debt'.
* Controlled spending: make a note of the things you urgently need and control the urge to spend unnecessarily on things that you might go without. Divide your monthly income thus: necessity, needs, investment, and savings. What you need most is necessity; secondary needs (which you may or may not need very specifically) are needs. An investment is in shares, bonds or real estate. Savings is what you will make use of in your future.
Zero debt is all about money management. Check the usage of credit cards: to maintain a zero balance always be cautious about your credit card usage. Eliminate the urge to swipe it wherever you need to: this is what will land you in deep financial trouble later. So it is best to minimize the credit card usage to maintain zero debt.
* Debt consolidation: If you are in debt or trying to repay a loan, always pay the monthly balance without fail or try to extend the repayment period so that the monthly stress will become less. Debt consolidation is another option which you can discuss with your financiers. Discuss a debt elimination plan with various companies and try to get the best debt consolidation possible for zero debt.
* Plan a monthly budget: planning a budget can lead to your having zero debt. Allocate how much you can spend on food, transport, clothing, entertainment, etc, and stick to these limits. Following a more disciplined approach will serve as great milestones to keep you debt free.
Zero debt is all about planning and managing the resources available. Making wise financial decisions can make keep you in zero debt. Get the help of debt consolidators or financial consultants to guide you to the right track which will give you zero debt and which means complete financial freedom from debt.