Helpful Advice To Clear Your Debts
There is a state of mind that is extremely beneficial to have if you’re in debt or are just generally looking to be in a better financial position, and that is to live as if you make around 75% of the money you actually make, or to live within/beneath your means
So what exactly does that mean, live within your means? Well, very basically it means don’t spend more than you make, but in fact, your main target should be to be spending less than you bring in as net spending money and the bigger the gap between expenditure and income the better.
If for example you were on a salary of 40,000, your aim should be to live as if you only earn 35,000 if not less. Lots of people will read this and feel that they cant simply stop spending that much money or they would have done by now, but there is some advice for you to have.
Most people in financial difficulty could in fact avoid a lot of their spending as many people consider non-essential purchases to be essential. Some examples of these are holidays, new clothes, weekend drinks and generally replacing household items before they absolutely need to be replaced, however the fact is that most, if not all of these type of purchases could be avoided or at the very least deferred for a while, and if you really think about it, these type of purchases could make up a large portion of your overall spend.
The reason for lots of peoples financial difficulty is the financial decisions and commitments that they have made in the past. Regular payments to your financial commitments can be a terrible burden, but think about if they’d lived below their means from the beginning, they would probably now have some considerable savings and be financially comfortable at least.
A good way of combating this situation is to try and envision what your life would be like if you had lived within or beneath your means from the beginning and use that as inspiration to create new shopping restrictions for yourself in order to create that vision in the future.
Most people who are in financial trouble will have a credit card and this simply adds to the problem (if it didn’t create it in the first place.) Credit cards are a way for banks to suck money out of you and if you get into a habit of paying for things on a credit card, then you could quickly find yourself chasing zero i.e. paying off one month, then having no money so you get in more debt that month, then paying that off the next month, then having no money again for that month and as interest rates rise you will find yourself getting into more and more debt if you follow this pattern, so unless there is absolutely no alternative, credit cards should not be used.
Although not using your credit card appears to be shrinking your bank balance faster, in the long term it will be highly beneficial. If you endeavour only to spend your own money and not the banks by living as if you earn only 75% of what you really do and really thinking about whether or not you NEED absolutely everything you go to buy, then you will watch your overall debt begin to fall away and you will be on your way financial freedom.
