So you have finally decided that it’s time to make some life changes and you want to liberate yourself from all of your debt. If so, you’ve probably come to realize that it’s no easy feat. It’s really not as easy as a lot of people think. But, it’s possible with a plan.
The problem for some people is, they are missing some key motivational ingredients needed to correct an unbalanced budget. These need to be corrected before a debt elimination strategy can be started.
Let’s take a look at some of the key things, missing pieces for someone who wants to become debt-free:
First, is the lack of knowledge or refusing to listen to others.
It’s easy to find a solution for that. You read books about finance, listen to other people, but the most important is to have an open mind.
When it comes to personal finances, we are not well-educated. When you’re in college, do you have a subject on personal finance? Not likely. There’s none, so this should be studied well before the problem comes.
Second, inability to see the gravity of the situation.
If you think, “I’m in control because I pay the minimum payment every month,” or “I’m OK, I don’t delay payments,” that’s not OK.
The truth is you don’t know your real financial situation, or you are hiding from it. The mere fact that you only pay the minimum payment, that’s already a big problem.
For a $1,000 debt, you’re going to pay for months or even a decade. That’s too much. Your not seeing the seriousness of the situation. That’s the danger when you’re making minimum payments. It seems OK on the surface, but you don’t see the big picture.
Three, there’s no roadmap, there’s no strategy.
Your approach should be strategic. You shouldn’t accept problems today then tomorrow you’re just going to let what happens go ahead and happen.
Your goal should be clear. When we talk about the goal, what’s next to that? There should be a timeframe. You should have a target date when you will be able to complete it. You need a plan. That’s important.
One of the motivations that you need to do to become debt-free is to have an all-consuming reason to do it. For example, you can say that in 5 years or 10 years you want to own a fully-paid house. This is a great reason that you can give to yourself as motivation to become debt-free.
Are you the type of person who likes to write things down? So post it on your wall and view it every day. Put a pic of the house you want to own where you can see it every day and use it for inspiration. You have to be specific and committed to get it.
You also need to consider how to go about putting energy and effort into your debt goals. When you’re trying to cut down all your debts, it shouldn’t be all at once. You can break it down into little ways.
It’s much easier to solve any problem when you break it down. It’s the same with personal finance and debts.
When you have a $7,500 debt, and let’s say you want to pay it off in one year. So take $7,500 and divide by 12. Then divide that by four (weekly). See how the amount gets smaller? It’s like you need to save $75 per week in order to pay your $7,500 debt in a year and a half.
That’s the best strategy. That’s the most practical advice that you can follow because it becomes more realistic. And the smaller amouts won’t freeze you with stress and anxiety that bigger numbers might.