The world is full of people who carry debt, and some people even carry debt until their passing. People grow accustomed to having debt and payments, which they become numb to and just accept it as fact that it can never change. I am here to give you saving essentials that will change your feelings towards debt, and help unlock a path into financial freedom. All it takes is a lifestyle change and the desire to become financially free.
One item that many people omit from the personal finance habits is the creation of a budget. Creating a budget gives your money direction and purpose on where to go, which can make it an effective tool. Many people get their paycheck and a week later wonder where the money went. Budgeting allows you to not only direct your money, but track where money is going, and this can help you adjust your lifestyle accordingly. It certainly takes some time adjusting to a budget, tweaking things as you go, but one you establish a good habit of creating a monthly budget, this will become your new favorite tool.
Many people begin to tackle debt without having a emergency fund, and once that emergency hits, they use the credit card they just paid off to cover the emergency, which leaves them back at square one. Having an emergency fund allows you to tackle your debt and have a buffer zone should an accident or emergency occur. They crucial part to this is making the initial emergency fund fairly small, $1,000 to $2,000, that way you’re not spending your time saving money but rather allocating it to debt elimination. If you need to use the funds, be sure to as quickly as possible replenish the funds so you are able to get back on track.
You will not build wealth with debt on your books. No matter the debt, credit cards, student loans, or car payment, you must eliminate all of these before you are able to build wealth. The interest rates and the money you put towards these debts will consistently eat at your personal wealth and you wont make nearly as much progress as you could without debt. First you want to establish the emergency fund, but secondly you want to eliminate you debts as quickly as possible. Whichever method fits you best, stick with it and use your budget to direct the money where you want it to go.
Saving is as much psychological as anything else, as you need to adjust your habits and routines to fit the new saving lifestyle you desire. For the short term, that might include giving up on eating out or taking a vacation, but in the long term, you’ll be thankful and financially free, which mean you can to take as many vacations and eat out as much as your heart desires, as long as your budget allows for it.