Debt Freedom

Becoming debt free is simple, but not easy.  There are a host of things that attempt to block our path to financial freedom and independence.  Some of them reside within ourselves.  They are our social preferences and mental handicaps we have acquired over the years of living in a culture that has forgotten the truly important things in life.  The obstacles are internal and external and both need to be addressed if we are to escape the bondage of debt and breath free.

5 Meta Changes To Becoming Debt Free

The hardest thing that you are going to need to do to become debt free is change the way you think about money, life, and debt.  If you don’t make these meta changes to your worldview you are always going to be returning back to a life style that gets into debt for the strangest reasons.  My top five meta changes to becoming debt free are:

1. Come to terms with the fact that money will not bring happiness.  This needs to be seen from a bunch of different perspectives. Not only do you need to believe that having lots of money will not make you happy, you also need to believe that having all the things that lots of money can buy will not make you happy either.  Cars, houses, vacations, clothes, eating out - these do not a happy person make.
2. Identify your needs and wants and then stick to your needs and the wants that you can afford.  Once you realize that your lust for things will not make you happy you can come to an honest assessment about the things that you really need in your life.  This will help you understand where what money you do have should be going.
3. Get a healthy support structure in place.  Debt can be a signal that there is more wrong with your life than you realize.  Money problems could just be the symptom of a much deeper emotional/social/spiritual problem that resides within yourself.  Chances are you could use the support and affirmation of people who care about you and want to see you succeed.
4. Become acquainted with where you are weak when it comes to overspending and avoid those situations like the plague.  Identifying your “debt triggers” is huge in developing a mode of thinking and living life that is different from the past.  If you could not help spending whenever you went to the mall because of the intense rush is sent you then chances are you need to avoid the mall.  It will not work out for you to go back there, especially in the beginning.  Treat unnecessary spending like an addiction you are getting over!
5. How much money you make is just as important as how much you spend, so take some time to try and increase your overall income level and cut expenses.  Focus on your income and your expenses.  They both impact how much money you can pay down your outstanding debts with and increasing income and decreasing expenses will double your efforts to get debt free.  Don’t underestimate the power of a “both, and” strategy.

5 Practical Changes To Becoming Debt Free

In addition to these meta changes (which if you get you will be well on the way to debt freedom), there are some practical pointers that I wanted to mention before wrapping this up.  They are:

1. Stop spending so much to eat food.  Food is one of those expenses that you simply cannot go without.  You need it to survive and thrive so it is obvious that you need to lay down some cash to get what you need.  However, you should only spend what you need on it.  A healthy adult should be able to comfortably survive on less than a $100 a month for food.  For example, in my household, two adults and one 4 month old baby survive and thrive on $150 a month for food.
2. Get appropriate, affordable housing for you and your family.  The next thing you will want to tackle is making sure that you home fits your needs and your income.  The recent housing crash has left many realizing that they bit off more then they could chew.  This is in part because they felt like their happiness depended on a house of a certain quality when this is not the case.  Move to place you can afford.
3. Attempt to consolidate debt onto low interest credit cards if possible, the amount of money that you save on interest will really help.  If your debt is mainly of the credit card variety you will want to work it off as fast as you can paying as little interest as you can.  One way to do this if your credit permits is to consolidate your debt onto one low or no interest credit card.  This will save you lots of money in the short term and help you get out of debt faster.
4. Establish a debt payment plan and tell those who support you about it.  Once you have developed a healthy eating and housing situation and gotten your debts in order it is time to launch a debt snowball.  There are a couple of different methods for this, but the one that makes the most logical sense is to target the debts that have the highest interest rate first.  While paying what is expected of you for all the rest of your debts you put all the cash you can towards the debt with the highest interest rate.  Once that is paid off you take all the money that was paying that debt and you start using it to pay off the next highest interest rate debt.  You do this until all debt is gone and you have achieved debt free status.
5. Generate extra income in as many ways as you possibly can.  This is key for #4 to work effectively.  The more cash you can free up to pay down debts the faster you will be able to get out of it.  You will need to sell old and unused items without finding a replacement.  You will need to take #1 and #2 seriously.  You will need to find a way to leverage your skills so that you can earn more money with them.

If you can make the change in all 10 of these areas you will become debt free in short order.  Now that you know how to become debt free, are you going to do it?

Cheers,

Debt Free Joe

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