How not to end up in Debt
How not to end up in debt in this western society in which we live is not so easy when we measure success based on how much money someone has managed to accumulate. It seems a little ridiculous that someone’s status is judged by their material wealth which they surround themselves with. People see the expensive sports car they drive, the designers clothes they wear, the luxury holidays they go on (and of course the frequency of these holidays), but this is how we generally judge someone and no matter how hard we try we can’t help feel a little envious.
We see someone driving a £100k car and we label them a success and we look at our own circumstances and judge ourselves against what others have and we feel a pang of jealously, envy, regret, disappointment and wonder at which point in our lives they went left and the rest of us went right instead.
This is where some people start to get themselves into financial trouble. They see all of this “success” on the street and then again at home on the television with the assortment of happy, shiny celebrities living a fantasy life that they could only dream of and they just don’t want to be left out.
But without the income to afford the lavish lifestyles shown on the telly they decide to try and emulate the wealthy, successful so-called celebrities by buying designer clothes, latest gadgets, exotic holidays all on credit so they can feel better and get a taste of the good life they believe they deserve.
Trying to keep up with people with real money, in the sense those who have money in the bank rather than having to borrow it is a recipe for disaster. Buying luxuries on credit is a sure-fire way to go into debt fast.
Wealthy people are wealthy not because they are lucky, greedy or ripped someone off. They are wealthy because they understand how money works and how to make it work for them.
Look at it like this. If you have ever played monopoly against a child, the chances are that you will win. As the child learns to play the game and control their emotions towards money and how to control their fear of losing it all then they start to understand that monopoly is a game that can be won. They will even against an experienced adult provided they understand the rules. Sure, you might say that, but it is all down to the roll of the dice.
Well, if you have ever stopped and studied the game, you’ll understand that there is a lot more to it than blind luck of the dice.
Wealthy people just understand how money works and their relationship towards money is the same as your relationship towards monopoly money, they have no emotional attachment to it. They do not fear money, or in other words they do not fear losing money in the same way as most people do.
In the book “Rich dad, Poor Dad” by Robert T Kiyosaki wrote “The rich buy assets. The poor only have expenses. The middle class buy liabilities they think are assets,”
Rich people buy assets first and luxuries last, that’s all there is to it. If you want to be rich all you need to do is buy assets. Of course, this is easier said than done. But people need to learn delayed gratification and postpone the fulfillment of their desires until they can reach into their pockets and pull out the money without missing it knowing that they have multiple income streams making money whether they are wake or asleep.
Unable to defer gratification has led to an average household debt in the UK to reach over £15,385. This is money owed to credit card firms, banks and other lenders.
This number excludes mortgages. Too many people in the UK run up credit card debts and overdrafts to finance a lifestyle they have not earned.
The urge to keep up with the “successful” people drives people into a cycle of debt. Advertisers push people to reach for their credit cards using emotional triggers to make them part with their money.
The next time you watch an advert on television see if you can spot the emotional triggers. For example, they will show:
- Perfume adverts: Beautiful young women in impossible locations
- Car adverts: Happy young people having fun all getting along singing together.
- Razor adverts: Toned young men, looking bright and refreshed in a large bathroom shaving their faces in one unbroken motion
These are some of the emotional triggers which they use to have us spend more money than we can afford. The reality is this:
- Perfume adverts: Something to disguise the smell of last nights kebab.
- Car adverts: Stuck in a traffic jam, in the drizzle on some bypass someplace.
- Razor adverts: Tired looking pot-bellied man in a small, cold looking bathroom chipping away at two days’ worth of stubble.
Of course, if they showed any of my ideas above no one would buy their products. Because they know it is not the product you want to buy but the lifestyle, the idea that you too could be that beautiful young women on the top of a skyscraper in New York if you wear this perfume. Or you too could be that young toned man looking bright and refreshed first thing in the morning.
If we want to break the cycle of debt. The first thing to do is cut the credit card in half. Now, wait a moment you might say, this site promote credit cards, is it not hypocritical to suggest this? Well, no. We want to promote sensible spending; we do not encourage wanton spending for the sake of spending.
So, once again, if we want to start to break the cycle of debt the first thing to do is to cut up the cards in half, them half again and keep on cutting them up until they are confetti.
Make a list of all your debts and then plan on how you will pay them down.
Sell the Television(s):
The best advice possible is to look around the house and see what stuff there is to sell right away. Start to declutter and get the weight of debt off our shoulders. Each month pay down the credit cards. One very quick way to earn money fast is to sell all of the television sets. This will do away with the need for a television license along with no more having to watch airhead celebrities push their agenda into your living room. More time with family and friends. More time working on our own development rather than watching others working on themselves.
Interest Free Credit Cards:
There are many credit cards deals out there which offer 0% interest free balance transfers. See if you can get hold of one of these cards and transfer the balance of your credit cards to the interest free card. Read the small print to check to see if there is a fee for transferring balances. Don’t just pay off the interest but try to pay off as much as you can.
Debt consolidation Loan:
If you have lots of outstanding debts such as credit cards, store cards, short-term loans, overdrafts then you might want to consider a debt consolidation loan. It is much easier to focus and manage one payment per month than having to deal with many debts. Also, debt consolidation loans may have a lower interest rate that many of the debts which you currently have.
Speak to your Creditors:
If you want to reduce the monthly repayments, you could consider speaking to the creditors and request a new repayment plan where you can repay less per month. Although this will mean that you may be paying the debt for longer.
Take on a new Job:
More money means debts can be paid down quicker and be debt free even faster. If you are paying off short-term loans, credit card debts, overdrafts your only concern is to get them paid off. The best way to do this is to redouble your efforts and take either extra hours at your current job. If this is not possible then maybe take on a second job in the evenings or the weekends. You will only have to do this for a short time until you have paid down all the debts.
One thing you will find is that you’ll find that your bank balance starts to increase once all of your debts have been settled. You may want to keep up your new drive towards building a financial cushion.
There is nothing wrong with borrowing money, provided you can afford to repay it without causing yourself financial problems. Also, short-term loans are for immediate financial matters and never to be used for long term borrowing.
Who knows what you could use that money for, remember that the wealthy are wealthy because they buy assets first and luxuries last.