Learn how to tackle debt without hurting your lifestyle!
Guest Post By: Andy Masaki from PennylessDad.com
It is not at all mandatory to break your happy lifestyle, to pay off the debt that is lingering with you for a long long time now! You can tackle debt today with this guide.
But, only your lifestyle can help you to tackle your debts!
A sweet, healthy, and money mature lifestyle is all you need.
So many times have I advised people, who need debt help, that they got to make a few crucial changes to their lifestyle and spending habits.
This, however, doesn’t mean, that they got to start practicing hard-core frugal spending habits, or that they can never again splurge!
It is just weeding out the nails from the wood plank.
Just apply a little sense, and use your sensibility to determine what parts of your lifestyle and money behaviors instigate you to spend too much.
If you can understand these simple factors that bring in more debts to your house, then you can very well keep on with your normal lifestyle, yet manage to pay off your debts.
Therefore, it is more of amelioration, rather than asking you to cramp down your lifestyle in whole! All you have to do is try to improve the lifestyle you lead.
This post is developed to help you understand that debts are a byproduct of a lifestyle gone wrong.
The way you spend, and the way you make use of your income, is what triggers your debts! A thorough grasp of ‘what you want’ and ‘what you need’ will eventually help you to decrease the debt welcoming practice, that you often ignorantly pursue.
So, without wasting much of your precious time, let’s take a plunge, straightaway, into how you can pay off debts without compromising your lifestyle.
The proper division of your paycheck is the first sensible thing to do:
A good lifestyle speaks of good money management.
If you believe that your habits and lifestyle are constantly forcing your subconscious self to do unnecessary expenses, then the problem is obviously with the incorrect distribution of your monthly paycheck.
The way you divide your income among all the respective fields of expenses, that you have, is what defines the characteristics of your lifestyle.
Having an income of $5,000 per month is not bad at all! It’s an average American income.
But spending $2,000 out of it on Alcohol, Smokes, Movies and Gig tickets, is really bad.
You will have to break down your expense list in a detailed manner and plan which expense gets how much dollar amounts assigned.
This might not be a perfect round table plan, but it is definitely a heuristic approach that you can pretty much apply and see good results in a short span of time!
All those who are rich and in a financially stable position, know very well how to channel in each and every dollar they earn.
They don’t waste their money by doing unethical spending! All they do is divide.
And, those divisions will surely have a section called luxury expenses, but it will carry the most minimum level of importance.
Therefore, you also need to do exactly the same thing!
Your income, your expenses!
You decide how you want to prioritize them.
Here’s the Zero Based Budget, to make things easier for you:
As you might find it difficult to proportionally divide your paycheck into all the expenses you have, you should hence make good use of the Zero Based Budget.
This budgeting strategy is pretty ancient and old, in the senses, that it makes up the basis of all budget oriented activities performed by corporations and governments, those that help in the growth of human civilization.
Zero Based Budget, demands that on the very first day of each month, you sit down to mark out all the probable expenses you will be having in that month.
Once, you are done with listing all the expenses, you will then figure out how much amount each of the expenses will take up from your paycheck, based on their level of importance.
Importance is a very subjective form of explanation. And, considering personal finances, it is completely made up of ‘needs’ and ‘wants’.
This part is however mostly based on your mode of thinking.
If you believe that buying a costly car, or the upgraded PS4, is more important than the daily bread and butter, or your savings, or insurance payments, then that’s totally up to you!
It is up to you, how you will prioritize your expenses based on these 2 factors, your ‘needs’ and ‘wants’.
After you have a good grasp of all the expenses you are going to take charge of, and a good idea of the amounts they will be made up of, you will add up all your expenses and get the total expense amount.
You will be subtracting this amount from your paycheck and see how much money you are left with.
If you are left with nothing, then well and good! But, if you are left with a significant amount, then use that to build extra savings, or do extra debt payments.
However, to keep in mind, no matter what budgeting method you follow, in the end, it must have enough room for your debt payments.
Now, how to make room for debt payments?! This is the next big part to walk on!
Improvising your lifestyle by prioritizing debt payments and savings, should be your ultimate goal:
The question is definitely not about stressing yourself out and sacrificing your lifestyle. Never let anxiety ruin your financial life!
Maintain a calm mind, and handle your finances with a rigid grip! All the worries and tensions will get washed away if you start to give more importance to your debt payments and savings, rather than doing too much unethical spending.
It’s just asking you to be a bit sensible.
Go back to the above section for a minute, where I explained the Zero Based Budget!
There I told you to jot down all your probable expenses. In this part I want you to list the debt payment category and amount, as the topmost expense for every month, till you have cleared all your debts subsequently.
This position will be taken up by your monthly savings after you have paid off the last dime on your debts.
To live a happy and healthy life, it’s very important that you lead a healthy and wealthy lifestyle.
And, the key to a healthy and wealthy lifestyle, is to not have any debts with you, rather an ample savings amount in your vaults.
I can obviously give you some frugal tips, so as to boost your healthy lifestyle up a bit.
But, will you accept them?!
You might then count it to be as sacrificing your lifestyle standards!
Still, for your own good, you can start off by limiting credit card usage, not taking out any payday loans and avoiding unnecessary personal loans.
Always keep in mind, that unsecured debts or consumer debts, can most often do you no good! They are usually considered as costly debts, due to the high-interest rates they carry!
Therefore, it’s better you stay away from them, as much as you can.
On the other hand, secured debts like a mortgage or an auto loan for a vintage car can actually be considered as an investment vehicle, and there’s no need in rushing to pay them off!
Take your time, and go with the payments as per the schedule.
Also, if you are having any student loan with you, and are now well settled in your career because of that loan, then that’s a good debt you have!
Pay it off as per your convenience, and you have absolutely nothing to worry about if you are keeping up with the timely payments.
Other debt relief options are also open to you:
You can call this as a bonus inclusion.
I advise people to seek out debt relief options only if their debt situations turn out to be unsolvable, after trying out everything they can on their own.
Here, considering your concern to keep your lifestyle intact, a good debt relief option might become your most ideal solution.
Learn how to consolidate debts, if you can’t organize your payments on your own. You can follow the credit card balance transfer if all you are having are surplus credit card debt numbers.
You can even approach a debt consolidation company and let them organize the payments for the debts with a suitable budget based on your lifestyle costs.
Still, if you are in no position to pay off your debt amounts in full, then debt settlement is probably your call.
For this, by the way, you will have to take help of a settlement company, who will negotiate the debt amounts with your creditors and let you save significant amounts on your debt accounts.
Now, that’s all I have for you right now, in a blog post that is typically limited in structure.
But, you can follow our journey and stay updated with us, for a more detailed approach to any other debt related queries you have.
Stay happy, blessed, and debt free! That’s what we always wish for you.