Living Beneath your Means
The average American mindset is to live beyond their means. If they make $20,000 per year, they will spend $24,000 per year. With this type of mindset, no amount of consolidation or debt reduction help will benefit them in the long term. No matter how much money they make, their expenses will always be higher.
The trick to financial stability is living below what you can afford. Notice I didn’t say “AT” what you can afford. To be actually stable, you have to life below your means. This means if you make $30,000 per year, your spending must be less than $30,000 per year. If you spend $25,000 per year, that puts you in a good position to set money aside for retirement, prepare for emergencies, etc. If you spend everything you get, you’ll go into debt when an emergency comes up and you have an unexpected expense.
Living beneath your means also provides a level of freedom because it puts you in the position of deciding what is important to you. You get to decide how you spend your “extra” money. When you live beyond your means, the decisions are already made for you.
- Living within your means-- In general American's don't live within their means. They spend more money than they make and this is what causes people to go into debt. By making a concious decision to spend less than you make, you will set yourself apart from the crowd and head down a financial path...
- Living Debt Free-- The average American does not think like a debt free individual. Their mindset is so tied up in the idea of requiring debt to fund their desires. If you want to live debt free, you have to change the way you think. One of the biggest differences between people with...
- Living Frugally-- The best debt consolidation approach is to avoid it entirely. If you are careful to temper your spending and lifestyle choices, you can most likely live in a way that you'll never need to consider a debt consolidation companies services. This is not how most people live. Be very very...
- The Flexibility of Living Debt Free-- Many people are so accustomed to debt that they don't even try to get out of debt. Instead of evaluating potential purchases in terms of what they can afford, the look at what payments they can afford. While many people may handle their finances like this, it is an extremely...
- The Debt Mindset-- Many people just expect to be in debt. It is part of their world view. People who were raised in debt and much less likely to even think it is possible to live debt free. So much of what we believe is based on what we experienced growing up. Another...
- Debt Free Mindset-- In the US people seem to have a debt mentality. They make purchases based on the payment instead of the cost. This of course leads to buying many unnecessary items. If you think something is only $50 (per month), it is much easier to purchase something than if you think...
- Borrow from Yourself-- If you want to consolidate your debt by replacing multiple high interest loans with one low interest note, you have several options. One option that many people overlook is borrowing from yourself. Many retirement funds are setup where you can actually borrow money from yourself and pay it back on...
- The Future Power of Money-- The most important part of getting debt under control is learning how to avoid unnecessary expenses. This is a lot more difficult than it sounds. I find that it is easier when I look at the future value of money. In other words instead of looking at a music CD...
- Freedom is Avoiding Debt-- When you go into debt you become the slave to someone else. We don't usually think of it in those terms, but in reality that is what happens. You are no longer in control over how you spend your own money--some of it belongs to someone else. Credit cards and...
- Credit Counseling-- Debt consolidation is a last resort. The best plan of action is to avoid ever getting into a situation where you need debt consolidation services at all. This is where credit counseling can be very valuable. You sit down with a financial adviser who helps counsel you in how to...