“Debt is the slavery of the free.” – Publilius Syrus
In today’s world, hustle culture has been high. Everywhere around us, we see people grinding to enjoy the luxuries and comforts this materialistic culture offers us. All this fast-paced environment can get overwhelming at times. “What to do?”, “How to achieve the state of perfect financial bliss?”, “Whom to listen to?” are the questions that torment each of us as we are confused in the face of all this information. Well, be no more confused, as we are here to attenuate all the noise, help you focus, and bring financial success and independence your way!
Suppose you need help with finances despite having a stable source of income. In that case, you need to make changes in your monetary habits. More often than not, the people who face trouble with achieving financial independence struggle more with managing their money than an actual lack of it.
Before moving further and delving deeper into all the methods and techniques to be financially stable without the additional hassle of being buried under piles of debt, it would be helpful to set out a few parameters and clarify some things.
First off, when we say financial independence, we do not, by any means, intend to imply that it means being completely freed from the nuisance of handling your money well. Imagine this: You see the car maintenance bill that came off unexpectedly this week. You can feel the panic settling in your stomach as you curse yourself for booking that deluxe suite during your vacation to a dream destination. Imagine how manageable the ordeal would’ve been had you handled your budget beforehand and saved some for rainy days.
Stress-fee tips on how to Handle Debt:
1. Learn to Budget
The perfect recipe for a financial disaster is to spend your money without making a budget at the start of every month. It is only possible to get ahead on the path of financial independence if you keep wondering where all the money went at the end of each month. This habit will also get you into debt gradually. Before you know it, you are indebted by hundreds or even thousands of dollars! Getting indebted is the murder of financial stability. The sure test of getting rid of this curse is to keep track of your spending and make a budget. Before the month begins, assign each of your pennies an assignment and track where it is being spent. This way, your finances will be monitored and kept on the right track.
2. Say Goodbye to Debt — For Good
As we have mentioned, the best thing you can do to ruin your financial well-being is to be indebted. You can never honestly expect to enjoy total financial freedom or peace in your life if you’re constantly giving up hundreds of hard-earned bucks to lenders or banks. Your income is the most essential and fundamental tool you can use to be financially stable. And you can not expect to go very far if all you are left with is bits and pieces of it at the end of every month.
We get that it’s easier said than done. Still, you have to devise a method to systematically eradicate every bit of student, house, or credit card loan from your life. The good news is that most people got a good raise after adopting this habit.
Getting rid of your debt is the first thing you should do to get a raise. A pro tip for that is to put aside at least a thousand dollars for an emergency, lest something derail your loan-ridding process. Throwing in all your extra cash to eliminate even the smallest debt will do wonders for your financial freedom. Once you’re set on that road — well, you’ll see the miracles of it yourself!
3. Set Monetary Goals
We all know that in today’s fast-paced capitalist world, everyone dreams of being financially independent. It is a great dream indeed! But dreams without a plan will never turn into reality.
You not only need to have a dream of financial independence but also a vision so that it will translate into reality. After all, you would want to avoid being left with just a wish in your heart (and a large amount of credit card debt in your pocket).
For this purpose, you must set small and realistic financial goals for yourself — such as saving money or getting out of debt.
Making a concise and achievable plan for one year will take you a long way ahead. After you’ve made a financial goal for yourself, it is crucial to check whether your project is specific, goal-oriented and resonates with your situation. These seemingly small steps will help you in setting clear and achievable results!
4. Save Money for Emergencies
Another tip for financial independence is to set aside a substantial emergency fund. I have been trying to get this point across because it cannot be emphasized enough. You can never ever hope to be financially stable if you haven’t got a reliable emergency fund — whether to back you up when an unexpected expense comes or to help you slowly rid yourself of debt money. Money saved is like your best friend; it is bound to take you a long way.
Once you are out of debt, it is better to increase your emergency fund to cover 3-6 months of additional expenses like medical deductibles, broken appliances, etc.
And since we all know there is no relieving feeling than having cash on hand in turbulent times, what are you waiting for? Work on increasing your emergency funds right now!
5. Invest for your Retirement Future
To gain financial independence, you must have a few basic things like zero debt, emergency money, a clear monetary vision, etc. But the work still needs to be done here. After you’ve achieved these essential milestones and become financially relieved, it is time to plan for bigger things in the long run.
The next step after planning for short-term savings is to partner with a financial advisor who can guide you in making long-term investment plans. It is essential to start working on it early because the sooner you start, the more time you will have to grow and progress.
6. Plan beforehand for Big Purchases
After getting debt out of the way, you can finally come out of the hellish cycle of paying off loans and look at the big picture. It is the time to plan for big things. Once debt-free, you can start planning to set aside money for your dream purchases. Now is the time to take that luxurious trip to a place you have been dreaming of!
The plan is relatively simple. Take your trip to Dubai, for example. Since you are not living in debt anymore, all you have to do is divide the total expenses of the journey by the months you have to save, and boom! You can come back home stress-free without an enormous credit card debt haunting you alone.
7. Get the Right Insurance Plan
Many wonder, “What does insurance have to do with financial freedom?” Well, a lot! A good insurance plan is a defensive strategy that protects your finances.
Think about it: Without a defensive strategy, all your hard work is one lawsuit or one bad incident away from being at risk. While budgeting and saving help you become financially independent, securing the right insurance plan enables you to stay independent. This last step will perfectly cement your victory, and you can lie down and relax from here on!
Simply put, the most fundamental task in bringing about financial stability is to be free of financial liabilities such as loans and debts. You can think about more significant things in life after you have gotten these out of the way. The road to financial stability might seem long and overwhelming, but trusting the process and working gradually but consistently toward your goals will surely bring you there one day. Setting micro-goals, ridding yourself of debt, and making long-term investments are simple habits that will get you ahead of scoring and securing your financial freedom.