3 Debt-Destroying Habits Everyone Should Follow
Getting yourself out of debt is simple, but it's not always easy. It requires resilience- forgoing impulsive purchases in exchange for long term financial freedom.
Personal debt can be categorized as necessary or unnecessary. Necessary debt can generally be linked to assets such as a home mortgage, a basic car for getting to work, or a college degree. Unnecessary debt, on the other hand, might include routine credit card charges, or installment loans for items that rapidly decline in value.
If your goal is long term financial freedom, avoiding that unnecessary debt is crucial. These simple habits can help you achieve your debt-free goal:
Live below your means.
Living below your means requires that you discover what those "means" are. This could entail tracking your income and expenses over a period of time to learn where your money comes from and how it's being spent. You might be surprised- by spending less on the little items that add up quick (like daily lattes, dining out, or online shopping), you'll be able to apply those savings to your debt and develop long-term wealth.
Save for emergencies.
By setting aside money that is easily accessible, you avoid racking up credit card bills when unexpected expenses happen. These could include emergency room trips, replacing an expensive car part, or patching a hole in the roof. A reserve fund can help you survive periods of unemployment without incurring additional debt.
If you do go into debt, make it a good reason.
If you do decide to take out a loan, know what you are doing before the process begins. Think about how valuable the item or service will be three months from now. Also, ask yourself whether you can pay off these new charges before they accrue additional bank fees.
Staying out of debt isn't always fun and exciting, but the long term benefits are substantial. Give us a call at 805-496-2828 if you'd like to learn more on how you can save by reducing your tax liabilities.