Battling Debt: Life Lessons for Financial Freedom

| October 14, 2013 | Comments (6)
Life-Lessons-Financial-Freedom

© Dana Rothstein | Dreamstime

Now is the right time and good as any other time to really assess how you’re doing with your fight against Debt.

 

What’s the right formula for getting out of debt? I constantly see with most people where this confuses the heck out of them.  It’s simple, as finally beating debt down has more to do with personal behaviors than with some magical formula.

 

It means not taking on any new debt while working to your financial independence.  It may mean cutting up all, but one or two Credit Cards that you use for emergencies only. More than likely, it can mean keeping track of your expenses while tracking your debt fighting progress and on and on…

 

…Ridding Yourself of Debt Once and For All

In my lifetime, I’ve fought off and gotten rid of thousands of dollars worth of debt.  I’ve documented this transparency in posts such as the Case Study of Knocking Out $5000 worth of Debt,  Case Study: This Tool Helped Me Build Wealth Over 20K,  How I Live Without Credit Cards and more.

 

As you can see, it’s not some magic formula, but instead the discipline and behavior of getting off your rear end and getting it done!  The mechanics per say of getting things done.

 

It’s sad to say, but many people spend more time researching buying their next zip dee doo dah (E.G. Think IPAD, Boat, Car e.t.c.) than planning / knowing their own net worth.  This is a behavioral issue, much more than a technical one – that sinks unsuspecting people further into the trap of debt accumlation.

…As you may have noticed, this post is more of a rant of persuasion more than a normal blog post.

 

Getting Fired Up About Your Finances

You know that feeling when you walk out the door of your favorite store with something like a 42” Flat Screen or something you’ve worked really hard to purchase on your own?  I’d like you to start transferring those feelings in paying down debts, building your financial wealth being and working towards Financial Freedom.  This is what will make the difference.

 

It’s the little things even if you’re paying down little by little each month.  It really is something that simple in this battle against debt where you can make strides towards life freedom.

 

Escaping the Rat Race

Let’s get very real here, what does finally getting free of all debtors financially and life-lesson-financial-freedomhave totally Financial Freedom?

 

What would it look like to become wealthy?  Why would you like to become wealthy or become rich?

 

These are very real questions that you have to ask yourself in order to really start progressing your life.

 

Putting Your Wealth Building on Steroids

When you decrease expenses and at the same time – boost your income while reducing debt, you have the trio mix that can build your wealth exponentially.  This is where you want to be.  Not simply existing financially from paycheck to paycheck.  Why would you like to obtain this money?  It can be leaving a financial legacy, being able to live a better lifestyle, being able to give more as just a few reasons.

 

There are many reasons that you want to build wealth, but at the same time, it’s YOU and only you that can come up with the ‘Why’ of what it means to be wealthy and what it could do for you.

 

Getting to the point of building wealth exponentially is no easy work, but its work that’s absolutely worth it in the end.  It’s just as incredible as the Mojo of Compounding Interest where your money starts working for you even when you sleep!  In fact, Einstein, once called Compound Interest one the world’s great wonders. This is the critical point in life that is worth it to be at.

 

Fact of the matter is, most people also don’t value their ‘time’.  Its been said the one constant that makes an average person equal with a billionaire is that they that they both have the same 24 hours available in a given day.  What we do with that time is the most important use of time.

 

Set Realistic Goals and a Process Map for Financial Freedom.

 

You’re probably asking, ‘Are YOU Serious?’

 

Absolutely….

 

You should be starting to map out and plan fully your financial life if you haven’t already.  Most people that achieve what they want in this life started out with a list of achievable goals.  So, take time this week to map out your short and long term goals if you don’t have them in place.

 

Here’s a Great Start to Setting Goals straight from FEB:

Setting Your Financial Goals Using the S.M.A.R.T. system

 

Not only should you set your goals and evaluate them early, but you should also map out how you battle down your debts.  After all, this is definitely not the easiest battle, in fact, it’s one of the hardest financial battles on your way to Financial Freedom and Independence.

 

I’ve taken the liberty to get you started on picking apart and giving you a Free process mind map of really getting out of Debt.  You can view and download this mindmap (in pdf format) below and get started asap.  Download The F.E.B. Get Out Of Debt Process Map (Right click and save as).

war-on-debt-3

As reiterated in the mind map for fighting debt, here are some points to hit the ground running to becoming debt free:

 

12 Ways to Fight Debt Immediately

 

1.    Stop The Financial Bleeding

Reassess your finances and find where your finances are ‘leaking’.  This could be as simple as eating out too often e.t.c.

 

2.   Cut Up Credit Cards with The Highest Interest Rate

This goes without Saying, but getting rid of those high interest rates will go a long way to your road to wealth.

 

3.    Pay Off Small Debts 1st and foremost

Always tackle your minimum debts and get them paid off

 

4.   Once Smaller Debt is Paid Off, Pay Off Your Next Smallest Debt

Apply your old payment to the next smallest debt and what you would pay for that debt.  E.G. rolling up two payments into one.

 

5.    Invest in Investments that make You a Minimum 10% ROI

You should be shooting for a minimum of 10% returns to build out your wealth.

 

6.   Regularly Check and Boost FICO scores if Applicable

Keep Your FICO score at least in good standing for the 1-2 credit cards that you do hold in the case of emergencies.  Cut all other Cards that are leading to more debt.

 

7.    Have The Discipline to Not Incur New Debts

This one is a lot harder than it sounds, but like point 1 above, you should be plugging any financial leaks that can lead to further liabilities on your side.

 

8.   If You’re An Employee, Work for A Raise

A good strategy in wealth building is to maximize your income so that you can grow it at a quicker rate, ask for the raise or ask what it would take to get one and how to work towards it.

 

9.   Boost Your Income, While Decreasing Expenses

Like point #8, look to boost or supplement income and decrease expenses where possible.  This is like giving yourself a raise in effect.

 

10.  Help Someone With Their Own Finances

Once you start ‘snowballing’ your net worth and decreasing debt, be a mentor or help someone less fortunate with their own finances.  This is one of the rewards that comes from actually doing the hard work and you get to help people in the process.

 

11. Only Keep 1-2 Credit Cards on Hand for Emergencies

My suggestion when it comes to credit cards and you’ve got consumer debt is to really just keep 1-2 cards for emergency use or for items like gas, groceries e.t.c. that you can comfortable pay of the balance monthly.

 

12.  Rinse and Repeat Until You Achieve Financial Freedom!

Once you start making great gains in building up your wealth and become debt free, you are at that pivotal point where your Finances outweigh your expenses e.t.c. and your money starts working for you day and night.

 

So, is it really that simple to begin your journey to Financial Freedom?

 

Absolutely.  This is something that just about anyone can do once they put their minds to it.

 

It’s as basic as ‘A’ got you to ‘B’ where reverse actions will take you from ‘B’ back to ‘A’, but you’ll be much richer at the end of it.

 

What most people do is end up getting discouraged, raise their shoulders and say ‘what’s the use’.  These same types could be sabotaging their finances on a daily, so do the opposite.

 

Like was said before, what’s going to make all the difference here will really come down to basic behavior and how you treat your finances.  Ultimately, you’ll provide a better life for you and those around you if you’re finances are in good shape.

 

Also, learn to reward yourself with small rewards when you hit a milestone such as paying off one of your debts or getting that well deserved raise at work.  Could be as simple as a celebratory dinner with a few friends or upgrading to a more decent phone e.t.c. Just don’t go overboard here, you don’t want to reverse any of your hard work.

 

We’ve all been fed the lie of the dream, you know the big house, the boat, the big wedding, two brand new cars, the vacation home and so on.  Problem with this is that most of those dreams come funded with credit up to the eyeballs.  “I can afford it” most would say, then proceed to fund their life with their 13 or so credit cards.  No wonder we tend to rack up such serious debt these days.

 

The culprit?  Most likely ‘Instant Gratification’.

 

We’ve become the generation that people want things instantly – think instant coffee, fast food, impulse buys on credit and the list grows very long.

 

What we’ve got to learn to do is to delay this gratification and even do away with it for the most part.

 

Example: Did you know that consumers on average spend much more on their typical bill when plastic (credit cards) are involved?  When you spend cash, you tend to feel the ‘pain’ of the spend more - which tends to allow you to ‘curb’ your spending.

 

Billionaire Media Mogul, Oprah Winfrey, says that she usually will wait on average 7 days before she makes a major purchase to see if it was more of a want vs. a need.  This is someone worth more than a billion dollars, yet walk around your favorite mall and observe those that swipe plastic like it’s going to expire.

 

The biggest issue with debt is that it can be downright scary to deal with, even quite involved and daunting at times.  My advice to you is to always take a small action every day that will get you closer to your goals.  It could be as simple as setting your mindset, re-evaluating your goals, working your budget and so forth.

 

The Journey To Financial Freedom

By now, you’ve probably noticed that I’m on my own path to Financial Freedom and documenting the journey as I go along.  Question is, are you on the way to True Financial Freedom?

 

We’ve been trained and coerced into taking jobs we hate and settle on just to pay the bills, eat dinner and watch a square box called a tv for a few hours until we’re too tired to stay up and do it all again the next day.

 

We’ve been accustomed to trading 5 for 2 or working 5 days just to get two days off.

 

As in his book, ‘The Millionaire Fastlane’, De Marco stipulates that we should Millionaire Fastlanebecome wealthy enough to trade 2 for 5 or 2 days of solid work in or on your business and be in the position to take 5 days off if we so choose!

 
Image by amazon

 

Now, isn’t this a far cry from what most people do by choosing to stay in the rat race?  They become comfortable with this existence because of the security of staying in their comfort zone.  The norm now is taking out mortgages for 30-40 years for a smaller payment.

 

We’ve accumulated so many things and accumulated so much debt that it dictates many people’s cash flow throughout the month.  Our earlier generations were a generation of savers for the most part, these days it’s common to pay minimum balances on anywhere from 3-6 credit cards.

 

That’s why it’s so important to really take and re-evaluate your wealth building strategies from time to time.

 

It can really make a world of difference on all fronts when you work constantly on your finances and you get richer as a bonus the more you work on it.

 

I have a feeling you’re on the right track, stay encouraged and push forward.

 

Got some ideas of your own and how you currently battle debt?  I’d love to hear your comments.

 

 

 

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Category: Debt Freedom, Financial freedom

  • http://www.paxforex.com/forex-blog Paxforex

    In order to achieve financial freedom you need to not rely on your employer for income. You need to have an income stream which does not depend on the economy. Most chose financial markets for that matter.

  • Financial Freedom

    Good point. I however believe that long term there should be multiple
    streams of income at one’s disposal to build wealth quicker. Forex is
    obviously one good option, but you should really diversify your income.

  • http://blogbizbuzz.com/ Joan-BlogBizBuzz

    Excellent post Dwight.

  • dwightanthony

    Thanks, hope it resonates and helps others out there to get out of debt sooner than later.

  • http://www.paxforex.com/forex-blog Paxforex

    Yes, I agree. It is never wise to rely on one source. Forex can be part of an overall portfolio, but in general trading should be approached with the right mindset as it is not a way to get rich quick.

  • joy

    THis stuff is good man
    Thanks for all the tips
    I need to implement all of them