Everyone knows that ‘debt’ is a bad word. Even among young teenagers, who have never had to face debt themselves, this is common knowledge.
For those who have dealt with debt personally, simply hearing that word brings up bad feelings and stressful memories.
While it would be great if all of us could live an entirely debt-free life, the reality is that debt is very much a necessity sometimes. For many people, purchasing a first vehicle or a replacement vehicle when their current one dies requires taking out a loan from the bank.
Even for those who were able to pay their car off up front, buying a house will require applying for a bank loan.
For many individuals, vehicles and homes are by far the largest portion of their monthly expenditures, but they are often not the reason for financial difficulties. Many people find themselves being nickel-and-dimed month after month by credit card bills, with increasing amounts of their money going towards paying interest.
It’s when people find themselves at this point that they often make the decision to focus on paying off their debts, or file for bankruptcy if repayment is no longer an option. Making the switch to this mode is not at all easy, and making a list of all your accounts and their balances can be shocking, but this realization is the first step towards your financial independence.
The very first thing you will need to do is prioritize your finances. Take an extremely critical look at your finances, and cut out everything you don’t need. This can include extra TV packages, upgraded internet speed, monthly subscriptions to movie rental or video game services, etc.
Remember, the goal is to be entirely debt free, so having to live without a few conveniences for a short while can be the catalyst that leads to a brighter future for you and your loved ones.