End the Stress of Debt with These Tips
for Financial Independence
By Donna Jo
As a young adult, it's likely you know the importance of financial independence. At the same time, however, you may be saddled with debt that you can barely service, leading to dependence on one or more outside sources to ensure your financial survival. There is a better way to live, however; a way that results in financial freedom and independence that can ultimately last a lifetime. By reading and following these tips, you can be well on your way to making choices that help you achieve your financial goals.
Priority Number One
As you have gotten older, you've likely set many goals for yourself in various areas of your life. At the current time, you may have multiple goals you'd like to achieve by next week, next month, next year, or within the next decade. Among all the goals you have, however, the single goal you're most likely to achieve is the one you set as your first priority.
Though it may seem simple, this is essential advice to remember: you will always find a way to accomplish your highest priority. So, if your highest priority is always to have the latest fashion and technology, you will likely achieve that goal. However, it will come at the cost of the goal of achieving financial independence, a goal which is arguably more noble and important.
Unique Ways to Save
Smart saving is a key component of any journey towards financial freedom. It's important to remember, however, that saving money comes in all shapes and sizes. A great way to work toward financial independence is to analyze the things you already spend money on and see if there are ways to obtain those goods and services for less money.
For example, if you pay renters or homeowner's insurance, the rate you pay was likely offered to you after you answered a few questions online. However, you may find that your insurer offers special discounts if you take actions to improve the security of your home, such as installing an alarm system or a doorbell camera. Across all your spending, these hidden discounts can add up to some serious savings every month.
Understand Reality
Another component of achieving long-lasting financial independence is understanding the reality of your situation. In other words, don't ignore your finances until you end up in a financial position that could ruin you. At the same time, you don't want to constantly worry about your finances, as that could lead to a host of mental and physical health issues that could take years to overcome. To avoid both of these extremes, it's important to "take the temperature" of your finances regularly, so you thoroughly understand your income sources, how much debt you have, and how you're tracking on the road to financial independence.
Beware the Budget
In every financial scenario, a budget is a priceless tool to ensure you take care of your finances as you build your wealth. When creating your budget, it's important to obtain real-world numbers for the categories you include. For example, if you're trying to figure out utility costs for a 1,500-square-foot apartment, it won't do you any good to budget for utility costs at a 700-square-foot apartment. Even if the budget isn't pretty when it comes to the numbers, it's important to be brutally realistic to ensure you stay on track and avoid any surprises.Be Careful with Credit
As you may already know, those credit cards in your wallet can be both a blessing and a curse. To be sure, many credit cards offer fantastic rewards that, when used properly, can help you reach your savings goals faster or allow you to treat yourself now and then. On the other hand, credit cards can lead you into serious debt, seriously fast, and leave you with a debt load that you can barely manage.
It's crucial, then, to take the responsibility of credit cards seriously and consider wisely if you're able to stick with paying them off in full, month after month. On the flipside, though it's not recommended that you carry any balance on your credit cards, if you find yourself in a situation where this becomes necessary, make sure to service that debt as quickly as possible, paying as much as you can toward the debt until you can kiss it goodbye.
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Practice Makes Perfect
Above all, it's important to remember that you're unlikely to wake up tomorrow and find yourself financially independent. Peak financial health and well-being can take a while to achieve, and there will likely be mistakes along the way. When you encounter a setback, don't let it ruin your progress. Instead, appreciate it for the learning opportunity that it is and work to make the next setback (because there will be a next setback) less damaging. Before you know it, you'll be a master of your finances and a proud benefactor of financial freedom.
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