It’s a myth that creating a habit only takes 3 weeks. It takes a lot longer, especially with the habits that are deeply engrained within us. Start slowly and put things in place to help you become accountable.
Getting out of debt deserves a celebration! Whatever that might be for you, but going somewhere you’ve always dreamed of (being debt free) and having the trip paid for sounds like a great reward!
While I’m not at all suggesting this so you can compare yourself against others, but rather know that you’re not alone. That there are others how there who can relate to you and more importantly, reassure you that the you too can do hard things. That you too will become better because of it.
Creating some type of visual reminder is a great way to keep in the front of your mind what your goals, dreams, and aspirations are and how debt is not going to help you get there, and instead, slow you down.
This is really really tough because we want or wish so badly that our situation was a little more like that of someone else we probably know. Just remind yourself that you can only work with what you have access too. And that’s okay!
It can be hard to see the light at the end of the tunnel some days. Reminding yourself how far you’ve come and where you want to be are great ways to keep focused. You can keep a journal of your journey and create a vision board of things you want once you’re out of debt.
Some states still use jail time to encourage you to pay debt. Some states allow debt collectors to chase after you for 4-6 years. Not to mention, you’ll be financially ruined and branded. Rebuilding your life after avoiding debt may very well feel impossible.
The magic number for this has been defined at 36%, with the max being at 43%. 36% DTI gives you some wiggle room for changes in your income. Debt included in this is for any money that you owe: Mortgage, car, loans, etc. Income your gross monthly income. DTI = total monthly debt payments/gross monthly income.
Good debt are loans with low interest rates and often considered as a type of “long-term” investment. Such debt would include mortgages, car loans and student loans.
The simplest way to look at this would be anything with a really high interest rate. Such as credit card debt, personal loans, or payday loans.
You want to first tackle debt that has the highest interest rate first. Ideally, you would be paying extra on these types of loans first until they are paid off and then snowballing money spent on that loan into the next loan you have. You’ll probably find varying opinions on this as some are math based, others are based motivation and staying committed.
The are countless ways a person can make a monthly budget. With so many options, it can be overwhelming to know which way is better or more successful. My advice: Research about many of them and take from each the elements or the concepts that you like and make the most sense for you.
Money is a major stress point and is only compounded when more than just yourself relies on the same money. The best advice is to have open communication with the whole family to make sure they are onboard.
A monthly budget, in my mind, tracks where all of your money is going every month. In other words, a monthly budget includes everything you’re spending money on. How you categorize your spending is where the art of budgeting is different for everyone.
This budgeting concept has been popularized by Senator Elizabeth Warren. You divide up your after-tax income: 50% on needs. 30% on wants. 20% on savings. This budgeting style is rather casual, but can be effective so long as you always know where your money is going.
Living paycheck to paycheck makes it very difficult to find a way out of your debt. However, it is possible and it starts first with changing your mindset and believing you can make the changes needed to create a budget and live within your means.
Often times our greatest achievements come when we’ve had the support and accountability of a friend or mentor.
It’s so much easier to save a a couple hundred dollars a month than it is to come up with $1,000 for new tires or whatever.
Living on the side of having nearly nothing, it makes you appreciate the kindness and generosity of others. Whether directly, or indirectly. Everyone is fighting a battle we know nothing about.
When I was unemployed, the amount of my monthly expenses seemed to tower over me like the Empire State Building. What seemed manageable, was suddenly daunting.
Despite what some people might think, claiming unemployment was probably the best thing I did because it allowed me to focus on finding a job that was a good fit for me.
It's very much a surreal moment, no matter how much you might have wished for it, as you mind catches up and begins to tell you all the ways in which your life has just been turned upside-down.
After having been budgeting for a year and a half or more at this point, I was more than thrilled when I was accepted into the Unemployment program and that the money I would earn was nearly identical to the amount I was already budgeting and living within. This meant that my lifestyle didn't have to take a major hit, and I could focus on the more important issue of finding a new job or opportunity.
It's not as big of a celebration of as actually paying off your loans, but it was pretty monumental for me to actually dive in and start paying off my loans, being committed to my new budget, and making needed lifestyle changes to make it happen. For me, this was a major turning point that is worth recognizing.
Earning extra money soon became priority-number-one. There are a lot of options out there when it comes to earning some extra cash on the side. What you decide to do needs to be conducive to your situation... for me, it was going after more side-hustle work. The part-time gig for whatever reason could not work out for me.
This might be a whole other daunting task, but has the potential to greatly accelerate your end goal. My advice/suggestion to you is to evaluate what your talents and skills are. Try to make money off of it. If that's not an option, you can always find a second job or donate plasma or broadcast your video game skills on Twitch.
It’s daunting, believe me, but once you’ve seen, you’ve gotta zoom back in and focus on the things you can control for that day, or that week, or that month. As much as you might wish the time to fly by and be at the tail end of your debt, it doesn't work that way. But the good news is that days turn into weeks, weeks into months, and the months into years. Don't get caught up in what might or could happen next year when you can simply worry about today. The rest will come, without a doubt....
Find joy in the things you do have and have accomplished. Simple as good health, no car troubles, food on the table.
These days will come, but you can’t forget to take a look back to see how far you’ve come. Just remember, we aren't going back or giving up, we are simply looking back to see how far we've come. To remind ourselves that we have made progress and that it is possible for us to keep going.
Autopilot is nice because we aren’t constantly stressing over details, but every now and again, we need to stop and readjust. We need to make sure that we are in fact staying with in your budgets, and if we aren't, make needed changes so that we can still be successful by living within our means.
