What is debt?

You may have heard the saying that “debt kills”. While in reality debt may not kill, it can make a lasting damage to people’s lives. Today there’s considerable awareness about debt, yet people are still falling prey to this trap. Knowingly and unknowingly they get tangled in this knot, where liberation becomes next to impossible.

Research proves that individuals spend years paying off school or college loans. As hard as it sounds you can’t just bring your debt to zero, because somehow your life has become dependent on it.  So, the art becomes in managing debt in such a way that it does not hinder your ability to enjoy life.

What category do you fall in?

When it comes to relations with money and debt, one can divide people in three categories.

The first category lives to save and remain debt-free for their entire lives. This group tends to prioritize saving over spending, therefore sometimes missing the fine luxuries and fun that life can bring. They will try to remain debt-fee at any cost.

The other category, the so called “achievers”, in the process of establishing themselves can get into debts. The achiever never slows down, they work hard and pay their debts. After paying off all debts, they may realize the cost of these efforts go beyond the financial payback.

The final category are the lavish spenders, an easy prey to debt. They spend easily by swiping their cards and once the feeling of instant gratification fades, all they are left with is a credit card bill to pay for a long time.

Observe your spending and saving habits and try to identify the category you belong to. 

The question

Now, the million dollar question. How will you beat your debts? If you find yourself in debt, the first step is to stop spending. Do not let the bills pile up, or go into the habit of paying the minimum payment only. If you’ll pay it back one day, why not today?

So, start planning your finances wisely. If possible get help from a trusted friend or a money coach. However, be careful to not spend money you don’t have for expensive financial advice you don’t need.

When tempted to buy something (which we all know you don’t need) just think of the weight debt will bring to your life. Keeping this in mind will help you prioritize your spending and focus on the absolute necessities until you’re debt-free.

Life after debt

A word of warning: life after debt will be very different! You’ll have the freedom to choose where you spend and what you buy with the comfort of knowing that what you’re spending is your own money, and not debt you must pay to someone else.

It’s best to try and understand the impact of incurring and accumulating debt, before you consider going into debt.

Sometimes you may find yourself in a situation where debt is unavoidable. Situations like a medical emergency, loss of income or a divorce may all put you in a tough spot where a short-term loan may provide the room to breathe. For those situations, think short-term. Get the loan to solve your emergency, get back on track, finish your loan and continue to live debt-free.