Debt is a huge problem for anyone who lives in a developed country. The sky’s the limit as to how much debt North Americans, Europeans, and many living in Asian countries can take on when we’re able to make minimum monthly payments.
Fact is, 73% Americans die with over $60,000 still owing to creditors. The most frightening reality isn’t that most of that debt is (in order): Credit cards, mortgages, and auto loans. Most of those who die still have $14,793 in outstanding student loans!
Anyone support the notion that post-secondary education should be free to those who can keep their grades up? Alas, the point is that most of us carry debt throughout our lives, myself included (I still owe over $10,000 in student loans myself!)
The reality is that we all have the capacity to pay off our debt, many of us have just become so comfortable carrying our financial burdens that we just never nail down a proper game plan to pay them off, including curbing poor spending habits.
Here’s some simple, yet effective tips for getting your finances in order this coming year:
1. Dig deep for your “why”.
I don’t want to get all Tony Robbins, wishy-washy motivational guru on you here. But, as I mentioned earlier, most of us stay in debt because we learn to live with it. If you truly want to get out from under it, you need to figure out the reason you want to be debt free — family, travel, lifestyle — to actually own your own home one day, etc. Without a good reason, much like all the failed diets you’ve tried, you’ll relapse sooner rather than later.
2. Every dollar needs to mean something.
This is the easiest/hardest debt-crushing tip to employ. Lavish spending has to go out the window if you’re committed to paying down debt. Stick with your current iPhone instead of paying for an upgrade you don’t really need. Head out to a local pub instead of Red Lobster. If you’re not budget-minded and accounting for each dollar you spend, the only way out of debt is to win the lottery or work your tail to the bone doing multiple jobs.
3. Stop going into debt pretending you’re something you’re not.
In other words, stop trying to “keep up with the Jones’s.” Your time will eventually come — or maybe it won’t. But, you can’t afford to lease a new Land Rover if you’re 100,000 in debt after graduating college. I’ve been there and done that, on a lesser scale, thinking somehow everything will magically come together. Trying to keep up appearances is one of the biggest reasons people go into debt and stay there for their entire life.
4. Earn more money!
Well “duh” you say. Just make more money. There are tons of ways to make extra dough doing side gigs. Trade your car in for a gently used truck and start hauling trash, collecting scrap metal, or helping people move. Get a virtual gig working online writing, designing, or whatever you can think of that matches your skill set. Offer consulting services to people who can benefit from your knowledge. Become a life coach — I don’t care — just start making more bank.
5. Every extra dollar should go towards debt.
I think this is much easier than it seems on paper, and it’s something I’ve been doing with a lot of success over the last year. Every month, I budget an extra $100 to be put toward the balance of one of my many credit cards. The minimum plus extra is still made on all my other debts, but each month I pick a random card and put that $100 down. You’d be surprised how much impact such a tactic has over time. Even if we’re talking about a five year plan because you’re so debt-ridden, nix an unneeded expense or two and put that extra cheddar toward your debts.
An excellent credit rating depends on having the ability to take on debt and pay it off. Make this year the year where you say “enough is enough” and start a committed journey toward paying your debt off once and for all!
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