Living with debt has become a norm to many people’s everyday lives. However, things need not be that way. Here are two simple ways for an effective debt elimination plan that can ease your financial problems.
Many people nowadays live from paycheck to paycheck – around six out of every 10 people, according to Career Builder. And from these people, 40 percent allot their basic living expenses on their credit cards.
And if you are one of these people, worry not as there are ways on how to free yourselves from the chains of debt that are binding you.
Before diving into how you can plan a debt elimination mission, you must first figure out the root of why you are in debt in the first place. From there, you can start figuring things out on whatever money mistakes you are making.
According to Dani Johnson, life coach and best-selling author, wrong money decisions come from “poverty mentality.”
People who do not have debt do not necessarily mean they earn bigger. The real difference between people who have debt and people who are debt-free is simply their mindset when it comes to money and how they are spending it.
People who have “poverty mentality” always has the urge to spend just because they have the money to spend it. And these people tend to spend everything, usually more than what they make.
Like they usually say, “Just because you can do not mean you should.”
There is a thin line between needs and wants and people usually, step on the wrong side. Dani Johnson says individuals with “poverty mentality” think that they should spend the money while they still have it. Possibly influenced by social media too, these people also have the urge to spend lavishly on their homes, cars, clothes, and whatnots that are way out of their budget.
This is because these people always look for validation from others. They want to be praised and envied, and they believe upping their “social status” can bring them happiness.
But it is not too late, though. There are still ways to save yourself by having a debt elimination plan.
1. Spend Less
Many people will think this sounds obvious, or easy. However, a lot of us also have a trouble on putting it into action.
According to an article cited by Dani Johnson, one character shared by people who are debt-free is that they spend significantly less.
One key plan into making it possible is by spending less than you make through changing your lifestyle, like moving into a smaller apartment or choosing a car loan with lower payments, or maybe slashing down your shopping sprees or skipping a trip to Starbucks for a couple of days.
There are a lot of ways to cut down expenses and it is all about making these conscious little decisions.
2. Set A Financial Goal
For an effective debt elimination plan, you must set a financial goal. Without a goal, it is easy to get swayed by temptations and little stopovers that can accumulate to a really big hurdle along the way.
If your money has no purpose, Dani Johnson says it can easily be sucked out. By not having a vision, you can easily push aside saving with excuses such as you will save when money is not so tight, or by age 30 since you still want to enjoy life.
No matter how small of an amount, even just 5 percent of your paycheck, will go a long way if you just start early. Emergency funds, health insurance and more come in handy as you will never know when an emergency can arise.
With a financial goal, you can set aside what goes where that will help you budget until the next pay – with no unplanned spending. And also, steer your eyes from that upcoming big Kylie Cosmetics sale.
As a bonus to ease some financial troubles, it is announced that the federal government will forgive student loan debt to at least $108 billion. It comes as a part of popular plans that links repayment to loan on earnings of borrowers.
It is, of course, good news for many who already have mountains of loans even before working and earning. This is in response to GAO’s (Government Accountability Office) review of repayment plans that are driven by income. Many of whom are finding it hard to pay back federal student loans.
Most of the time, we fail to see the simplest ways in solving our financial problems. They are so obvious that people often overlook them. However, with a solid debt elimination plan, it will be easier to live a life free from debt sooner rather than later.
You can read more of Dani John’s blog Trade The “Whip & Chains” Of Debt Slavery For True Freedom!
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