Debt is something that most of us take for granted and that we think is just a part of life. But is it really? D we all have to have mountains of money that we owe to credit card companies, department stores and car manufacturers?
Many of us think that the answer to this question in today’s society is yes. And that you need an eight figure salary to live an 8 figure lifestyle, which very few of us can actually do. But in reality, it does not have to be this way. Some common sense approaches to living can help you reduce or eliminate your debt and start actually saving. Here are some approaches to follow:
Most people fall into debt because they do not plan. They live from month to month only thinking about what is immediately in front of them financially. Instead everyone needs to start looking at today and the future to understand what they need to be focusing on now. What are your bills? What will they be next year and the year after? How can you lower them? How does all of this work against your current and projected salary? What is your savings plan? Do you have an investment plan? When you start understanding the math, you see how the impulse purchases you make today impact your future. Start by writing things down and noting what you spend and where your money is going. You might be surprised how the little things are adding up every month to cause you to live below your actually salary. Also make a plan to pay down your debt. This will give you freedom.
Set Small Financial Goals
The way to create big things is to keep making small things that collectively add to a big thing. This is the same case with savings and spending. Just like dieting, if you do the small things all the time you will begin spending less, lowering your debt and saving money. Remember the key is discipline not big moves. When you keep hitting smaller goals, you will feel motivated to keep up the pace and accomplish bigger things. So pace yourself and set smaller goals.
Pay Attention to Your Credit Score
Your credit score lets you know where you’re standing from an independent source. Credit agencies simply keep score because it is their business. They need to let others know how you are doing and how financially you handle yourself. If you want to know how they think of your actions, keep an eye on your credit report. Most people are surprised at how their credit card activity and purchases make so much on a difference in how companies view you as a risk. You might make a lot of money, but if you spend even more, you are a bad risk. Use your credit report as incentive to become credit worthy and credit smart. . Understand how to manipulate your credit report to your favor. The higher it is, the less interest you will pay on purchases. As an example, you can improve your credit by lowering your credit card debt to 30 percent or less of your available credit limit. Learn how all of this works and you will spend less and use that money for savings.