When you are saddled by debt, it is easy to be pessimistic about your future. A large chunk of your income goes into paying bills and outstanding balances that whatever is left is not even enough for necessities. So, you use your credit card again to buy food, pay for gas, utility, and rent. Then you begin the cycle of debt again.
According to the survey commissioned by LendingTree of 1,500 Americans in December 2019, 6 in 10 Americans are struggling with debt payments. They think that they can only be financially free by 2030, or a decade from now. Millennials, particularly, are more optimistic about their financial situation. However, only about 5 in 10 baby boomers think that they are being weighed down by bills.
But is Financial Freedom really possible when you have zero savings? The answer is yes, but it will take a drastic change in your lifestyle and also entail a lot of sacrifices.
Here are five ways for you to achieve Financial Freedom in no time:
- Take account of your debts. You need to face your demons eventually. Now is the time to do it. Find out where you are right now in terms of your outstanding debts. The next step is to reduce them and make the payment terms easier. You can either go for debt settlement or debt consolidation. Debt settlement will reduce your total credit card bill to as much as 50-60%.
- Rationalize your budget. Hire a financial counselor to help you manage your household income and expenses. Consider the expense as an investment. You may need help from an objective perspective. The expert also drives home the point that it is now time to get serious.
- Find an extra source of income. Remember the lifestyle change mentioned above? This is it. If you are only relying on a single income, that will not cut it. One of the spouses will have to work overtime or find a second job. The other will also need to work. Find a babysitting arrangement for the kids.
- Choose debit cards instead. As the country moves toward a cashless society, plastic may be necessary. But the key to Financial Freedom is you do not spend money you do not have. Credit cards give you the false confidence that you can afford luxuries. It starts with a few dollars, then suddenly you find yourself in a mountain of debt. With debit cards, you are forced to spend within your means.
- Have monthly target savings. It is one way to give you motivation. For instance, start with $100 savings this month, then you move on to $200 next month, and so on and so forth. With the debt settlement, the amount that you used to pay for debt can now go to savings.
Do not worry. The sacrifices you make would only last as long as you paid all the debts, and you have extra savings in the kitty fund. Also, once you adjusted and settled into the routine, the new normal will be easier to accept. It is not uncommon for some families to continue on the same path even after they settled all the debts.
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