The challenging year might push you to look for lifestyle changes to overcome debt. It is not surprising if you find yourself trying to juggle more debt payments than you can handle. This could be the result of relying on your credit during the peak of the health crisis. You might have been forced to take out high-interest loans just to make ends meet.
The pandemic was a real litmus test, especially for your finances. It forced you to take a long hard look at your finances. If you did not budget in the past, you might realize by now the role it plays in allowing you to manage your finances better. But with all those financial lessons you have learned from the past year, you might be wondering why you are not making any headway in paying down your debt.
This is one of the reasons why you might need to look at lifestyle changes to overcome debt. It is not enough that you re-allocate your income to help you meet your payments. It helps but it might not be a long-term solution. Moving your income around could give you temporary financial relief but you could only be working on the symptoms and not the real problem.
Much like catching the regular flu, it is more of a symptom of something your body is fighting off. You can treat the flu but you need to get to the bottom of your real medical condition. This goes the same for your finances. You might be quick to blame your credit cards for your debt but it is possible that your lifestyle is to blame as well. In fact, CNBC shares that credit card debt declined by $34 billion in 2020.
Lifestyle changes to overcome debt
This is where you need to carefully audit your lifestyle to understand if it is aligned with your financial goals. You could be trying to get out of debt or even save for early retirement but your lifestyle puts you in another direction. Here are a few lifestyle changes you can look at to help push your finances in the right direction.
Do not be too quick to spend
If you are looking for lifestyle changes to overcome debt then this is a great start. If you can recondition your mind to think of your payment priorities before spending money, this can give you the edge you need in paying down your debt. One of the best financial tools to help you achieve this is your household budget and an auto payment program.
Your household budget should be able to give you an overview of your income and expenses as well as payments. With this, you have an idea of which payments you need to prioritize. This can be high-interest payments or the ones with the smallest balance you can pay off easily. The important thing is that you use your budget to come up with a repayment plan.
Once you have identified your plan, you can also explore an auto-debit system. This is where your lender automatically takes out the payment from your account every month. Not only will this help you stay on top of your due dates, but it also lowers the chances of paying penalties over late payments. You just have to make sure you have enough in your account to cover your payments.
Adjust your social life to your budget
When you are exploring lifestyle changes to overcome debt, one area to look into is your social life. Many times, you could be caught up in the moment as you try and go toe to toe with your chosen circle of friends. Now, this is not actually a bad situation to be in. But if you notice that you are spending on items out of budget just to keep up with your social life, then you need to step back and reassess.
Why do you need to please people by purchasing the same things that they have? Morse, if you do not need it, then you surely be in debt. The more you spend on things you don’t need, the higher the chance that you will start selling items you need just to get by. Stick to your lifestyle and keep a close eye on your budget.
It is even better to identify ways how you can live below your means. Normally, people call this living a frugal life. This is where you spend below your budget. For some, they use their creativity to make the most of this lifestyle. Rather than spending a lot on family trips, they set up their backyard for some camping opportunities with their children. Your imagination is your limit.
Convert idle time toward making money
As you try and identify lifestyle changes to overcome debt, you might want to take a look at how you manage your time. Oftentimes, people are too quick to defend how they use their free time. It can either be a reward for a long day at work or just to catch up on some hobbies. Yes, you need to rest but there can be a fine line between that and idling around.
If you are spending your weekends on the couch not doing anything at all, then you could already be idling around. One thing that relaxes you is your hobby. Then why not use that to your advantage? You can actually tap into your hobby to earn a little extra money. Referred to as an income-positive hobby, this gives you the chance to spend time on the thing you love, improve that skill, all while getting paid as well.
Time management does not mean you have to use every single bit of free time you have in managing your finances. You are only human and as such, you require rest and relaxation. You just need to make sure that you put in more effort as you try and manage your finances especially in paying down your debts.
Why is it important to overcome debt
You might find yourself asking why there is an urgent need to pay down and overcome your debt. If you are at this point in your journey, here are a few things to help you understand better.
Key to financial success
Financial success differs from one person to the other. But a large part of how most people define success is being able to use their income to enjoy life. This means few debt payments to make every month. If you are able to pay them off and keep away from most types of debt, you can enjoy your income to the fullest.
Relief from anxiety
There is a big chance that you are looking at lifestyle changes to overcome debt is because you are already feeling anxious. A big reason is can be attributed to all your financial obligations. In fact, Time shared in an article that about 51% of Americans feel somewhat anxious about their finances. This can affect you mentally and even emotionally. This is why paying off your debt obligations normally feels like a big weight was lifted off of your shoulders.
There is no doubt that lifestyle changes to overcome debt can give you the chance to finally stay on top of your finances. Your lifestyle can help you regain control over your payments or make matters worse. Take a look at your priorities in life because this can help dictate the type of lifestyle you should have.