How to Obtain Financial Freedom by Way of Debt Elimination
The first stage is acknowledging the amount of debt that you are servicing every month and creating a budget that is realistic to pay it off. The second stage and financial goal would be to begin building your assets to improve your financial worth and the third stage is reaching a position where your money is working for you. I realize this may sound insurmountable but it truly isn’t if you achieve the correct mindset. In this article I will cover the first stage which is debt elimination. Without this stage the other two are irrelevant.
All though most people do not like to think about how much debt they are in, the first step to getting rid of your debt is acknowledging what your total debt is so that you can began to devise a plan to pay it off. Unfortunately it seems that the American way now days, is to borrow until you cannot borrow any more. This attitude is the reason why the debt to income ratio is so high in this country. You must first get to the mindset that you no longer want to be in debt. Most of what we buy these days is not even things that we necessarily need they are just things that we want. Try to form the habit of always asking yourself before you buy if you really need that object. Impulse buying can be deadly so maybe try to get use to thinking about leaving the store before you buy and see if your urge doesn’t fall by the wayside. Learning to control the need to buy for the sake of comforting yourself I realize is very hard to do.
Planning a budget is very important in this stage because you need to know how much of your income goes towards your living expenses and what you have left over to reduce debt. If there is nothing left over than you are probably living above your means and you need to figure out a way to lower your lifestyle at least until you can eliminate your debt. If you are in this situation, and I can assure you many people are, I highly recommend that you make some drastic changes. This may in fact mean selling your home, learning to be more frugal and changing your lifestyle. Living above your means truly is a recipe for financial disaster. Starting over is not a sign of failure but one of true inner strength and financial intelligence. Consolidation is sometimes an excellent alternative as well as a temporary second job or business. Once you know what you have to pay off you can actually calculate what you will need to make in an additional income and for how long to reach your goals.
I have a friend who went with her husband to look at cars. They did not really need, a new car they just were bored. Ultimately they came very close to buying a sports car for fun. Later however she told me they went home and talked about how much richer they felt for not buying. This is the mindset that you need to have in order to succeed at this game of getting out of debt. The more of your money you keep to pay off debt the faster you will realize financial freedom. Often times when you are buying with a credit card you simply are spending your future income before you have possession of it. You have heard the old saying that “a fool and his money soon will be parted” comes from this reality. Paying with a credit card is the same as spending your future money. As soon as you receive it, you have to pay back on the credit card. What is wrong with the idea of simply not having any credit cards? Credit simply fools people into believing that they have more money than they do.
I hope this article has been helpful to you my reader. I know what it is like to be in debt and I can assure you that although paying off your debt may seem tedious, it is the first step towards financial freedom and all that this state of being in tales. Can you even imagine what it is like to reach a point in your financial situation where you are no longer worried about how you will spend your money? It is absolutely the most liberating feeling you can imagine. In the end I promise if you can exercise some self discipline and work on eliminating your debt, your life will become so much less stressful. Upon completion of this stage you will be in a position to move on to the next stage.