HINT: Emotions and Finances DO NOT MIX well together!
Getting out of debt is not easy business. In fact, it is far from it. Even in the best circumstances, it is a terribly difficult, time-consuming, and stressful process.
But it is easily made all the more difficult when emotions are factored into the equation. Simply put, mixing your emotions with your finances is never a very wise idea.
At Project Debt Relief, I see this same ignorant mistake made time after time again. Truth be told, it is one of the most commonplace mistakes that I see people make regarding their problematic debt situations. You just can’t let your emotions get mixed up with your debt.
Yes, debt is an emotional thing. There is definitely no doubt about that. But when you let your emotions take over your decision making, things quickly get ugly. Emotional thinking in regards to your personal finances can make you do things that you would never otherwise do. It can cloud your thinking because you just want a solution and a fast one. Rather than hunt for the most effective solution, by doing their research and sorting out the fact from the fiction, many people end up doing things that actually hurt their financial futures rather than repairing them.
The biggest way that people let their emotional thinking cloud their debt problem thoughts is by accepting the advice of people that don’t know what they are talking about. They listen to assumptions from people who have very little real debt experience. They fail to assess what could be a simple solution with clarity.
Rather than doing what is best for them, what is most important, they let the desire to pay off their debts force itself ahead of everything else. Below you will find real advice on how to avoid making these same mistakes – to avoid making these mistakes. The advice below will separate the debt myths from the debt facts and put you on the fast track to effectively eliminating your outstanding debts.
The most critical thing that you can do for debt management (and prevention) and for your overall financial health is to save money. Opening a savings account (yes, a regular old savings account) is a necessity.
Having a savings account to stash a little extra money away in each month will pay off in a number of ways. First of all, it will serve as an emergency fund. If you ever need to spend money in an emergency or pay off unsuspected debts, then that is what your emergency fund is for.
Even when you are in debt, you should continue saving money. It is somewhat counter intuitive but it is also essential. Continuing this best practice is the only way to ensure that you will stay out of debt for the long haul.
Highlighting the necessity of having an emergency savings account is a startling statistic. This statistic relates the fact that over 50 percent of Americans – yes, over half – could not come up with at least $2,000 cash in 30 days in the case that an emergency popped up.
Let’s use that as a good starting point. You should get up to $2,000 in savings in any manner that you can (even if it’s only in increments of $100 a month). From there, you should continue saving as you are able to or as you see fit. Remember not to just put the money in and take it right back out. Only put money into your savings that you can afford to keep there.
Save For Retirement
In addition to putting money away in an emergency fund, it is also essential that you save for retirement. When people are getting out of debt, they oftentimes let this notion slide. This is especially true of people who are continuously struggling with debt, people who have real debt problems.
Retirement savings are important to start early on. Retirement can really truly creep up all too fast and be there before you know it. Even if you don’t feel that you can afford it and don’t feel you can continue to pay your bills, you should try. Even $100 – heck, even $50 or $25 or $10 – per month is better than nothing at all. This truly should be your highest priority of all.
Retirement savings are a long term way to stay out of debt. Cut the emotions now, in the short-term, and forgo that fancy new ‘gift to yourself’ and put the money in your retirement savings. When you are older, you will be thankful that you did. Retirement savings can be used to take care of your everyday expenses (including medical) when you are no longer able to work.
Let Go Of the Time Myth
When you are young, it can seem like you will never get old. It can seem like your retirement is light years away and that you don’t need to worry about it yet. But you do.
Your retirement will creep up on you and emergencies will happen in the meantime. Saving now – and not waiting until later – is one of the best things that you can do for yourself and your financial health. It really is the only way to stay out of debt in the long run.
Get Your Priorities Aligned
In other words, you need to wake up and smell the coffee. No matter how old you are, you need to realign your priorities if you hope to live comfortably in the future and stay out of debt.
Plan a monthly budget plan and track your expenses. This is an excellent start. Be sure to include money for your emergency savings and retirement savings in your plans.
Only when you have met all of these expenses (including retirement and savings) should you attempt to repay your debts. Yes, it can seem a bit absurd, but it is also necessary.
At The End of The Day
At the end of the day, you need to avoid making the same mistakes that countless people have made before you and that countless people continue to make to this day. You need to view your debt and financial situations from a distance and only do what is truly best for you, in both the short and long term.
Much of this consists of stepping back from your problems and really taking it all in. It consists of letting go of the emotions attached to your debt problem so that you can truly think things through. It has to do with settling down a little bit and focusing on the long term rather than the short term.
Only when you are able to save money for emergencies and for your retirement will you truly be able to get out of debt. Once you can do both of these things, you should be able to pay off your debts in no time at all. Better yet, you’ll be paying off your current debts and setting yourself up for a successful financial future.