If you meet ten randomly selected adult Americans in a room, odds are that only two of them will be debt free.
The saddest part is that some of that debt is entirely discretionary—it didn’t have to happen. Credit card debt is a great example. The average amount an individual owes in credit card debt is $5,700.
Now that’s a debt that can be overcome in a year with a reduction of spending habits.
How much do you spend on coffee every day?
Is it around $5? Do you visit Starbucks seven times a week? Well, that coffee had better be fundamental to life, because if that’s your habit, you’re spending $1,825.00 a year on coffee—provided, of course, you buy a coffee every single day for a year.
How much do you spend on fast food a day?
Would five dollars additionally be a reasonable estimate? Looks like you’re spending $3,650.00 a year unnecessarily.
Now let’s look at your car—did you finance it? How much do you pay a month on it, $300? Well, that’s $3,600.00 a year in and of itself. You’re spending $7,250.00 annually that you don’t need to.
Cut out the fast food and Starbucks.
Do you owe $5,000? Sell that financed ride and spend $2,250 on a beater that will last you two years. You’ll have your debt paid off that year, and can start saving money on coffe, food and regular gifts!
Not Everyone Is The Same
Of course, some people have larger debt, and some people have smaller debt.
Staying financially disciplined enough to overcome either takes practice. You’ll have successes and failures, but what you’re driving for is an aggregate. That is to say: the end result should be that for the most part, you curb your poor financial practices.
Cut out the creature comforts and anything you’re leasing—including an apartment if you don’t have a home.
Buy a motorhome and a plot of land and live there for five years. Solid mid-nineties motorhomes are available for around just $5k, and full-sized. Going this route, you could save $30,000 in five years if your rent were $500 a month. That could be a solid down-payment on a home.
Something else a lot of people don’t think about financially—until it’s much too late, at least—is retirement.
Beyond getting out of debt and cutting your unnecessary spending habits, you need to start putting a little away here and there for the future.
Time Keeps Moving On
So get yourself in sound financial shape. End all financing arrangements you have and pay off the little debts you can.
Cook food at home and budget carefully. Downsize and spend less. Additionally, you may consult a few financial advisors. Most of them have cost-free initial consultations, and you can get an idea of your options.
If you can be debt free, you’ll be able to provide for yourself in old age, and even for your family as they mature.
Yes, it requires discipline, but there is an exceptional reward at the end of the tunnel.