I was at the same place.
No savings after ten years participating in working market. But over ten years of stress because behind my back there was a financial debt breathing on my neck heavily.
In that time when you would tell me it will turn out good, I wouldn’ t believe. I also found difficult to start. And that is probably the most important, painful and difficult point of pivot. TO START.
To start debt-free journey is easy and difficult at the same time. Why is that? Deep down we know what we should be doing and what we shouldn’t be doing. But traps around us and the biggest trap of traps – our own mindset – usually blocks us from achieving our dreams.
I would like to list few things which were crucial for me when I realised I don’ t want to live like this anymore and become debt-free. No more stress whether I pay all my bills in time. No more worries what is the debt and instead of decreasing I keep adding to it with my poor decisions.
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Debt-free 101: Get Inspired – in a constructive way.
Oftentimes we look into inspiration but in the wrong playground.
I fell in my twenties in the trap of how I should look, what I should have – anything to feel like fitting in. Have I really fit in? No. What you were, what you own might drive this only in certain social circles. I was looking into having great clothes, having expensive shoes but I didn’t impress no one and I wasn’t impressed myself checking my salary getting wiped out and barely paying off the rent. You need a good breakfast. No new pair of heels.
Ten fifteen years ago the information was harder to find. Today any social media platform can offer you information on what is trendy. I suggest to switch from getting new clothes and cars trends in your feed to how to manage your finances channels and sources and debt-free tips.
We are what we consume literally in our diet to our hobbies. If your hobby is shopping instead of saving, you will never hold money. Switch your focus to financial and investment sources and even just by listening you realise you have different potential than being broke.
Plus lessons learnt will go mile along once you start to incorporate good financial habits to your monthly pay check routines.
Debt-free 2: Pay off and save.
Paying off the debt is difficult and can be discouraging on debt-free path.
For me personally it was a difficult path and I always felt as failure. Even I tried, I was slipping to old habits of spending to maximum I could and not keeping anything aside. So my monthly budget was always very tight and on absolute limit of what I could afford. I would buy a dress but I wouldn’t have enough money to buy any groceries by the end of the month.
I see the benefits of saving with time but if I would needed to go back and change something, it would be always paying towards my debt and at the same time putting aside anything I could to savings. In that way you know you pay towards decreasing the amount you own but you also see that money does not magically disappear. It is your decision what you make with them in the end of the day. We call it accountability.
It is hard to stay strong but once you start to see higher number on your savings account even you have the debt, the feeling boosts the confidence and sense of security. And that is priceless feeling when you know you need to stay focused and committed to the goal of paying out the debt.
Debt-free 3: Budget. Everything. From leisure time to new shoes if you really have to buy them.
Living above your expenses comes with overspending on your nights out and constant supply of new things.
No, you are not obliged to every event and night out with friends. If you didn’ t put money aside to spend given month on a dinner or a cinema, don’ t go. There are plenty of activities you could do with real friends which don’t cost. So be and stay mindful of this when you see Friday as everyday to treat yourself at a party. I skipped many times and yes, I felt I am missing out at first. But either you drink long drinks or you eat nutritious food.
Same applies to your closet. Do you really need that new T-shirt? Or dress? Or coat? Or pair of shoes?
I doubt it is for fact when you look into what you already have and appreciate it. We are wired to believe these are things giving us the value in the eyes of others and many times in our own eyes. About that in another article but look into your life and figure out why you have the feeling clothes or things are validating you.
I am HUGE fashion fan. But I had to understand at some point of my life I keep buying because it gives me the feeling of validation. We didn’t have much when I was a kid and a teenager. So when I started to earn, I started to spend on things I couldn’t have before. But I eventually realised I am not happier anyway. I appreciate quality over quantity but even to afford quality you need to make sure you don’t compromise on your livelihood and life. Meaning you pay your rent and groceries first. After basics come other things you have the budget for. Budget is your best friend if you want to become free of debt.
Debt-free ultimate: Take care of what you have.
I was once called a materialist by my friend in the time.
It was in the context of me cleaning my shoes. And even I didn’t come out from my family with any financial education, my mother always makes point of taking care of what you have. Either mending clothes or simply cleaning your shoes and coats.
When it gets dirty, it can be cleaned. If it gets broken, it can be repaired. As single mom with two children, my mum couldn’ t afford to buy new shoes every time they got dirty. That is a habit I still have.
So I actually responded to my friend I don’t see it the same. I actually see someone not caring about things as materialistic, because you live with the idea, you can always go and buy new. Yes, and you can on the other hand take care of what you have and save. Be that clothes or house appliances.
Research shows debt-free life should be our goal and can bring much more fulfilling life since debt damages mental and physical health.
Therefore my today’ s list is not exhaustive. I will share more about how to start and continue debt-free journey with new articles coming out. Stay tuned.
The most problematic is to start to see further tomorrow, end of the month and next pay check. It is important to create new habits but also not to loose your focus. What is it that you want in the future?
XOXO