Financial Freedom: An Effective 5 Step Formula to Break From Overwhelming Debt
By: Gibson Kinyua
Tags: Money Saving Tips, Personal Finance, Personal Development, Money, Debt

When economic times are unpredictable, people tend to lean on credit facilities to make ends meet. Actually, it’s amazing how most Americans are accumulating debts since most rely on credit to meet their daily expenses. There is no denying that credit can help you get through some tough financial patches but if you are not prudent with its utilization, it’s easy to ruin your credit scores.

Financial freedom has different definitions and the perception depends on an individual. The exact picture is heavily dependent on values and preferences you hold. Attaining financial freedom is coveted by most people. Nevertheless, the hard truth is that it can be out of reach, to anyone who is not ready to make serious commitments.

When most people are in debt, it’s easy to think that financial freedom is unattainable. In fact, it emanates from the deep feeling of helplessness that comes as a result of debt constraints. If you feel financial liberty is almost alien to you, this article attempts to debunk the myth that financial freedom is not feasible when you are in debt.

Good planning is all it takes and you’ll be set on the right path

If debts are weighing heavily on you, it’s pretty easy to concentrate on the present moment but at the expense of your future. Basically, financial freedom calls for adequate planning. If you dedicate your life to chasing after instant gratification, there is a high probability that you won’t have enough funds to invest in your future.

More often than not, cyclic debts are a result of bad spending habits. Unfortunately, habits are easy to form but hard to break. There is a trade-off. You have to choose between securing your financial future and sustaining a lifestyle that jeopardizes your future.

When you are deeply indebted, it’s pretty easy to feel that breaking free is still a farfetched idea. But in essence, all that is required of you is make a decision to replace your current damaging habits with ones that are in line with your financial objective.

Nevertheless, this doesn’t imply that you shouldn’t enjoy this good life just because you want to save for your future. There are endless ways of having fun without ruining your finances. All you need to do is put your needs, wants and financial goals in perspective.

You can increase your earnings

When your savings plan doesn’t have a solid foundation, it could take forever to become financially stable. If you listen to financial experts, they will tell you that living below your means is critical to breaking out of debt. Have no illusions, as long as you are spending money, no amount can last forever. Money can fly away faster than the wind.

Irrespective of how bad you want to stack up some savings, you can only optimize your plan after you are aware of how you have been spending your cash. To do this, you need to start tracking your expenses and determine what you have to cut back on.

Nevertheless, limiting your budget is seldom sufficient. There is always a line you can’t cross. But you can find a way to increase your cash flow. Besides offering your skills on available freelancing sites, you can also offer to sell some items on the merchant sites like eBay.

Make a commitment to pay your outstanding debts

Credit always comes with various benefits but some people often find them on the ugly side of things. This normally happens when you overestimate your ability to handle the loan repayments on time. But you need to know that being in cyclic debt doesn’t seal your fate to endless payments. If you choose, you can bounce back today and pay all the money you owe them and enjoy financial freedom.

Today, there are numerous debt repayment options and they are designed to make sure that you never have to stress about multiple payments which can be quite stressful to follow and track. If you are troubled by multiple loans that have high interest rates, these programs can be quite useful.

Basically, you can have an easy time to repay your debts because you don’t have to bother with multiple creditors but instead; you just pay a single loan. If you chose well, debt consolidation plans can help you get lower interest loans as well as better terms.

When you are budgeting, it’s always prudent to make sure that you have a sufficient allocation to pay back what you owe. After paying your debts, it is prudent to continue putting the same amount towards a solid investment fund. This will definitely hasten your financial recovery and freedom.

It’s crucial that you develop healthy spending habits

If you are serious about making progress towards financial freedom, it is imperative that you drop all your destructive spending habits. Poor financial decisions normally result in uncomfortable financial situations. Generally, the only way to make sure that you get out of debt is by making a strong resolve-then rethink your spending preferences. Otherwise, chances are that you will have to go through the same debt elimination process.

Unlike what most people tend to believe, breaking free from bad financial habits is not out of reach. According to psychologists, the average human takes about three weeks to develop brand new habits. Basically, this has much to do with your commitment to invite change into your life. As you can see, the ball is in your courts because this is seldom a question of if it’s possible but it all about when you want it to become a reality.

It’s no secret that you have to spend a significant amount of energy and willpower to make this a reality. Therefore, you might want to make sure all the efforts are not in vain by ensuring they last longer. At the end of the day, your ability to handle finances plays a major role in ensuring consistent wealth generation and lasting financial freedom.

Ditch the excuses and start investing today

Saving a portion of your income is the basic step to better finances. However, this is meant to facilitate other steps that can be more effective in creating wealth. Whether you think your income is sufficient or not, you ought to be growing your investment fund.

After saving for some time, make sure the money is invested through tested channels. This can’t be rushed and you need to consider your options to make sure your funds are safe. While you may be tempted to keep most of your money in a savings account, the returns are mediocre.

While there are risks involved with almost every form of investment, it offers you the opportunity to grow your funds exponentially. Furthermore, you don’t have to worry about the effects of inflation on your savings.

Before you dive in, make sure you have sought insight from a seasoned investment expert. Doing this will safeguard your funds and at the same time improve your returns.

Final words

Breaking free from cyclic debt is quite engaging and it may require some time to accomplish. This means you may find yourself off the track at times. Nevertheless, it is wise to track your progress and adjust accordingly to make sure you achieve the desired goal. Every time you make a mistake, take some time to reflect and analyze the mistake in order to learn from it.

Finally, always celebrate your achievements however small. This ensures you stay motivated as you work towards a debt-free and secure future.