Living without borrowing any money whatsoever can be very hard. The easiest and most obvious answer on how to live without borrowing is by using cash to pay for anything and everything. This means that you need to have a steady stream of income, be a compulsive saver, and be an excellent budgeter. If, however, you can accomplish these things, there should never been a reason for you to borrow money.
If your goal is to never borrow money, this means that you will never have a credit card, a car loan, a mortgage, or a student loan, to name a few. Because you will never have a credit card, you will never have a source of money (absent your savings) that you can access in the case of an emergency. Therefore, the best way to work through a financial emergency is to avoid having one altogether. This will require a steady, consistent paycheck.
Very few people can claim that they have total job security. As such, many people prepare for the event of a financial emergency by saving money (which you will also need to do and will be discussed below). However, if you have not yet saved enough money to deal with a financial emergency (such a getting laid off), the lack of access to credit cards could hurt you. Therefore, the best way to avoid this situation is to never get laid off or never lose your job until you have adequate savings in place.
This may sound ridiculous as most people do not have control over their employment situation, but there are things you can do to prevent losing your monthly income. For example, you could work more than one job, start a side business, or have investment money. The point is, if you want to live without every borrowing money, you need to have money coming the door on a consistent basis.
*Save, Save, and Save:
Saving money will be your greatest ally in your effort to live without borrowing money. Because you cannot take out a mortgage or a car loan, you will have to pay cash for these things. Very few people have an income that is high enough to be able to pay cash for a home or a car at one time. As such, you will have to save money over the years in order to be able to pay cash for these things.
If you want to simplify your life, you could always rent a place and use public transportation. Doing these things would negate some of the reasons to save money. However, as mentioned above, unless you have a steady income stream coming in on a consistent basis, you will need savings in the event of a financial emergency.
*Be The Best Budgeter:
Because you are living on cash only, you have no room to go over budget. Therefore, you have to be a great budgeter and have the discipline necessary to stick to your budget. Any deviation can cost you because your cash could run out for the month.
It is possible to live without ever borrowing money, but it can get hard. It is vital that you have a steady income stream, that you save as much money as possible, and that you have the skill and discipline to make a strict budget and to stick to it.