Debt freedom brought about by months and years of debt relief efforts is a dream. We all look forward to that and all our sacrifices and battles are worth it if we just get to that financial state. You would think that people who got out of debt will never put themselves in the same situation again.
Well that’s where you are wrong. As unfortunate as it may be, there are consumers who went through the difficult process of getting out of debt only to land in that same situation after a few years. In some cases, they get in an even worse situation than before.
The simple explanation to that is this: these people got out of debt without learning their lesson. Most of them failed to identify what got them in that particular situation in the first place. Since they never identified the mistakes, they did not make the commitment to stop doing them.
True debt relief is one part getting out of debt and another part preparing yourself to the task of staying away from debt. In the same way that a person who slimmed down has to continue exercising and regulating what they eat, you need to commit to certain habits to stay debt free.
Know the traits that will maintain your debt freedom
Once you have experienced the beauty of living without debt, you don’t ever want to live any other way. But to do that you have to learn the right traits that will help you maintain your new found freedom.
Here are popular traits of financially secure individuals and why you need to develop the same characteristics.
Self reliance. This trait will motivate you to prepare for any emergency situation that will keep you from relying on other people to get you out of a tight financial spot.
Self confidence. This will eliminate the need for you to purchase expensive items or rely on material possessions just to prove that you are successful.
Organized. To be debt free, you need to live on a budget so you can live within your means and avoid debt. A budget requires you to be organized because you need to put your expenses in order to allow you to control it.
Practicality. Another trait is knowing what you should and should not buy even when you can afford it. Practicality is a trait that is very difficult to implement if we have a lot of money but is a must to maintain debt freedom.
Personal responsibility. This is somehow associated with being self reliant. You know that you are responsible for your own decisions – good and bad. If you want to stay out of debt, you have to make sure that you make the right decisions because you know that you will suffer the consequences.
Patience. Being patient is a trait that will help you overcome the need to use your credit card to make immediate purchases. You can learn how to wait before buying something so you can save up for it. In some cases, you can even buy the product for a lesser price if you wait until the hype is all over.
These are only a few of what you need to adapt if you really want to maintain your debt freedom.
Practice proper financial management skills to stay out of debt
Apart from the traits that you need to learn, you also have to make a conscious effort to practice the right skills that will help you stay out of debt. That means practicing proper financial management skills.
The bottom line here is to live within your means and make sure that you eliminate any situation that will prompt you to borrow money. Financial management is a broad topic but we can probably narrow down the skills you need into three specific tasks.
A budget plan will help you identify your income and thus give you a general idea of how much you are allowed to spend on a specific period. It gives you the control that you need to make better decisions about your finances. It also allows you to make sure that your priority expenses are given the funds that it needs. You can really benefit from the organizing trait that you will have to adapt.
To guarantee that you will never have to borrow money to pay for an emergency situation, you need to start saving. Your emergency or reserve fund will help you build a secure future for you and your family – especially when something happens to compromise your main source of income.
Lastly, you need to start making smart choices about where you will put your money. This is actually where the practicality trait will come in very handy. You have to choose what you will buy and to only spend on the things that you know will contribute to your personal growth.
It is also advisable that you check your credit score often through the AnnualCreditReport.com and a free credit score calculator. This way, you can monitor if the credit bureaus are making the right reports about your financial activities. Not only that, you need to watch out for any identity theft incident that can leave you with a debt that you did not make. If too much time has passed, you may be forced to pay that off and nobody wants that problem in the debt free life that they worked so hard to achieve and maintain.