8/12/2013 3:00 PM ET|
The joys of being debt-free
No question about it: Debt stresses you out and paying off all your bills makes you feel good. So what are you waiting for?
Finding yourself in a debt spiral can seem hopeless, but it’s never too late to make a get-out-of-debt plan that you can actually maintain.
And how do you make a plan that sticks? Well, first it helps to determine your motivation for being debt-free. To help you do that, I’ll talk about the main reasons why getting out of debt can make your life better -- plus strategies to help you do so.
Why you should become debt-free
Where do you stand when it comes to debt? Do you feel that debt isn’t a problem or that paying it off isn’t your first priority? If so, there are probably many, completely legitimate reasons for this. But I’m going to talk about the reasons debt payoff should be first priority: for you, for freedom, and for financial prosperity.
If you are carrying any debt at all, then chances are good that you’ve experienced stress due to this at some point or another. It goes without saying that if you pay off the debt, then you’ll never have to be stressed about it again. But why is this important? Because debt can be like a black cloud hanging over our heads. It affects nearly every decision we make in life -- whether it’s regarding our careers, our relationships or decisions for our future. Depending on the amount of debt you have, you may even find yourself losing sleep at night, having trouble focusing at work and pulling away from your personal relationships.
Why would debt do this? Because too many of us feel shame for having debt. But it’s time to let go of that shame. So many of us have had to deal with debt at some point, and I’d bet if you talk to your friends about it, they’d admit they’ve been there too. So don’t judge yourself or feel ashamed -- rather, empower yourself to do something about it! You deserve to have peace of mind and a life without debt.
Become debt-free for freedom
What happens when you don’t have to worry about debt anymore? You suddenly have freedom to make choices based more on your hopes and desires and less on financial obligations! Imagine a life in which you can choose a career you love -- even if the pay isn’t as high as other jobs -- because you don’t have debt payments to make. Or a life in which you can take that trip you’ve always wanted to go on or save for the home of your dreams -- all because you can apply your extra money toward a savings account rather than paying off debt.
That’s the ultimate financial freedom -- to choose where your money goes. Without debt, you have more ability to invest and watch your money grow, put aside for your retirement, and build a strong financial house.
Become debt-free for financial prosperity
Finally, let this be the year you kick debt to the curb so you can have more financial prosperity. You may say that you don’t earn enough for financial prosperity anyway, or that your debt isn’t having that large of an impact on your financial future. To the first point, the beauty of compound interest means that all you need to do is set a little bit of money aside each month to build a strong savings years later. And yes, any little bit that goes toward interest paid on debt is a direct competitor to that savings goal.
Think your debt doesn’t have a strong impact on your financial future? All you need to do is consult a credit card calculator for proof that long-term debt can cost a significant amount, more than you might ever anticipate. The fact is, carrying debt will always cost money, so why not get rid of the debt and use that money for building financial prosperity?
How you can become debt-free
Are you convinced that now is the time to become debt-free? Now you probably want to know how to make that happen! Here are a few steps to follow:
- Educate yourself
- Make a plan
- Celebrate your success
For starters, it’s a good idea to get educated about all the things you can do to pay off debt. This includes reading books and blogs written by financial experts. The more you know about how to optimize your specific financial situation, the better you can empower yourself to move forward. No two debt payoff plans are the same!
Make a plan
Now that you’ve taken the time to educate yourself on all the ways you can optimize your finances and pay off your debt, it’s time to make a solid plan for doing so. Making a debt payoff plan should involve both doing an inventory of your budget (or spending plan) and making a solid decision for how you want to pay off the debt. No matter what plan you choose, just make sure it’s one you feel comfortable with and you know you can follow. You can even start slow. Once you see success along the way, you may just find yourself ramping up the intensity on your plan to get out of debt faster.
Celebrate your success
This step is extremely important. When you reach certain milestones along the way, give yourself a moment to acknowledge this great achievement. Want to make this work even better for yourself? Enlist a debt-free buddy and help each other stay accountable and celebrate successes. What could be more motivating than a close friend with the same goal?
If you want some extra motivation, thousands of people have signed up for one program, The Debt Movement, aiming to pay off $10 million of debt in 90 days. The program also offers a scholarship to contribute to your debt payoff. The buddy system is yet another way to stay motivated and on track to get out of debt have more financial freedom.
More from Credit.com:
VIDEO ON MSN MONEY
Learn the difference between a need and a want. Sacrifice and use self restraint and before you know your mindset will change. When I was in debt, I shopped for pleasure, now (a few years later) I am debt free (including mortgage) and hate spending or shopping unless it's absolutely necessary. A lot of stress is off of my shoulders and I can finally begin saving for retirement.
The eagles had it right...
So often we live our lives in chains, when we never even know we have the key.
I got rid of debt (high spending ex), and opened up the cell door.
Car = Paid For
Credit Cards = NONE
Work = 5 days a week
Save = 25% of income
It's really not that hard if you're willing to work and get out of debt.
Not owning a new car will help immensely. Car prices today are CRAZY! Some are as much as homes. Why do people buy cars with payments of $500 a month, when the thing will be no good in the next 10-15 years? Spend your money on things that will last and be valued later. My wife and I both own beat up vans that we paid cash for and cost us less than a third of what 1 new van would have. No payments, so we can double our house payment. We will be debt free in 7 years and bought our home 5 years ago.
Nothing keeps you poor like making payments on things. I have a friend who earns almost twice what I make, yet he doesnt own a home, doesnt own his vehicles, doesn't even own the tv in his living room, and he's always complaining about being poor.
I have 30 payments left on the house and then I will be "off the grid" forever. Everything we buy, we pay cash. If we dont have the cash, we dont buy it. Making a six figure income certainly offers us an advantage that others dont enjoy. Regardless, I once was down that dark road of debt in my younger years. NEVER AGAIN.
We go where we want, when we want, buy what we want and can afford, put money in the bank every week and have a feeling of freedom that cant be explained .
Living well is about living smart.
I am lucky in that I have never been in debt. I am the eldest of four siblings and my parents were tougher on me because I had to “set the example.” None of us ever got an allowance. We all had choirs that were assigned us and my parents did not believe in rewarding us for doing are assigned tasks.
My mom and dad are children of the depression. They were both from very large families and they knew the struggles of their parents trying to support their children. They learned the lessons of working hard, living within your means, staying out of debt, and saving for a rainy day.
I had to learn those same lessons at an early age. I was in high school and going out for a sport. My father picked me up from one of the matches and as he was driving home he told me if I had enough time for sports, I had enough time to get a job. I was fifteen years old and I was already making my own money mowing lawns in our neighborhood, doing yard work, babysitting, and anything else I could find.
My dad told me that was not good enough. Not only did I have to get a job; I was also going to pay for my own clothes and help out the family. I started working in a bakery before and after school and on the weekend. I had to keep up with my grades and continue to do all my choirs. My dad got a checking account with me and I learned how to pay bills, balance my accounts, and manage money before I was sixteen.
After high school, I worked two full time jobs for a number of years, a part-time and a full time job, and put myself through college without taking any loans. When I was in my twenties and living in an apartment I saved my money in checking and savings accounts, CD’s, savings bonds, and money market accounts. When I got older I taught myself to invest in stocks, bonds, mutual funds, and other financial instruments. I became good at it.
If I needed to purchase something I saved for it. The only time I took out a loan was to establish credit when I bought a car. I took out a two year loan and paid it off within a year. I did not get a credit card until I was in my forties and the reason for getting one was work related.
My parent’s lessons served me well throughout the years. I have lost my job a couple of times and had to start over. Even though I lost my job, I had less to worry about because I was debt free and had a rainy day fund. I am in my late fifties. I still work over fifty hours a week. I am in good health. I have had an investment and retirement plan intact for years and I am disciplined in managing my money and sticking to a budget
Though out the years I have helped out family and friends when they need financial assistance and I realize how lucky I am to be debt free, have a job and my health, and to be on tract to have a comfortable retirement. My parents taught me well.
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