I have opened my life to you in my past blog posts where I shared with you the story about how I was a spender almost all my life burying myself in credit card debts for consumables. I only started to get my act together and get a handle on my finances in Dec 2011.
I am sure you can relate to me when I say the feeling of having debts is like having a ghost haunting you or like a black cloud lurking to destroy the nice summer weather you are enjoying in the beach. Some people can just continue that kind of lifestyle to the point that banks are calling them to follow up for payments or receiving a letter from a lawyer due to non-payment or falling into severe depression and helplessness or even considering dark thoughts of taking their life. Thank God I didn’t reach that point and I was given a harsh wakeup call just in time.
As of now, I have not completely zeroed off my debt but I do have a debt elimination plan. This plan and executing the plan actually gives me hope of seeing my debt decreasing and eventually it will be completely eliminated.
Looking back, I know that I should have cleared off all my debt before I started investing but given that time or my age is against me, that I might be discouraged that I will never be able to start investing for my retirement fund and just go back to my old ways of spending I decided to do it all at the same time.
I don’t recommend this but I don’t regret this decision. Because I can see my saving/investments growing and my debt decreasing at the same time, and I have a clear and defined time line for zeroing out my debt. I am so looking forward to that day. I can really see light at the end of the tunnel. 🙂
So, I want to share you some key insights that I have gathered from my research through reading books, attending online seminars and based on my own experience which can hopefully help you as you wage the battle against the biggest war in this day and age called debt.
In order to overcome debt and be successful at it, the key factor is to make a decision to overcome debt. Once you have decided, you will need to have mindset and lifestyle changes, create a plan and follow through with patience, discipline, will power, focus, persistence and action/execution and repeat all the steps until you have zeroed off your debt.
I’m sorry to disappoint you but this is not an overnight journey and there is no magic wand to erase all your debt. It took years for you to dig yourself in this deep hole and it will also take years for you to climb out of it, it can be shorter but it will need radical changes in your lifestyle that you need to be committed to make.
Below are the 5 Radical Changes you need to do in order to overcome debt:
Stop digging a deeper hole by not continuing with your current spending habits – Your current lifestyle is the reason why you are in this situation now.
You need to understand where your money is going – Do this by tracking all your expenses. Later on you can see where you can decrease your spending so that you have spare money to pay for your debt.
The need to change your lifestyle and get support from family and friends – You cannot do this alone. You need the support and understanding of your family and friends as you will be less “generous” with the gifts, dinners and night outs. I am not saying you will be a miser but more of lessen the dinners at restaurant. Maybe you can prepare the dinner and it will be more special for them just make sure you don’t kill them in the process. 🙂
The need to understand your spending habits and how you view money – Once you are tracking your expenses you understand where the bulk of your money is going. For the non-essentials, understand why you are buying them – is it because you want to reward yourself or because you are feeling stressed. Once you understand the why behind the buying, then you can find a solution like reward yourself with non-expensive items or non-material things (like a walk in the park, taking a long bath, etc.) or just exercise or meditate to lessen the stress. The other way is save towards a big ticket item so that you have something to look forward to and it becomes more special.
This is the most difficult part of overcoming debt and taking control of your finances as you need to unlearn all your past money mindset and learn new ones – Attend seminars, read books and find like-minded people to hang out with.
It’s going to be a long and painful journey but there is hope as long as you take a firm decision and have the commitment to overcome debt, you will be able to succeed. See you at the zero debt finish line. 🙂