You know that feeling of dread that hangs over you when you know you need to do something? I assume that’s exactly how most people feel when they know they’re in debt or are in danger of falling into debt.
This past week, I was honored to be included in a round-up Debt.com put together in which various personal finance bloggers offered their best advice for those seeking a debt-free lifestyle. You can read exactly what I had to say here, but it really boiled down to setting your priorities and determining what you could cut out of your life to help you pay down your debt. Not only does prioritizing help you to set a plan to get out of debt but can also allow you to stay motivated to continue living a financially stable life even after you reach your debt free goal.
Let me explain. You’ve probably heard all kinds of rules about budgets, including various percentages that dictate how your income should be divvied up. These guidelines can be helpful to be sure but often times they lack the customization that will take a budget from just being good on paper to one that can actually be used in real life. For example, such a budget might lead you to believe that the best course of action for paying down debt is to simply shave off a little from each spending category. That might work for some but, for the majority of us, looking at spending that’s less important to us and making deeper cuts there in order to free up funds can be a far more effective plan.
For me, my biggest lesson in prioritizing happened when I left my full-time job and, after a couple months of unemployment, ended up making a living as an extra for television and movies. As you can probably imagine this lifestyle didn’t provide the most stable of income and, even when it was steady, it didn’t amount to very much. Despite this, I felt far more financially stable than I did when I was making my $42,000 a year salary! How? Because I suddenly realized that those DVDs and new tech toys that tempted me when me when I had a regular paycheck were far from a priority once times got leaner. Fast forward nearly 10 years and I keep those lessons with me as my wife and I carefully consider our purchases, determining not whether or not we can technically afford an item but whether we want to prioritize spending on something.
Honestly, in my mind, prioritization is at the heart of all personal finance. Whether you’re looking to get out of debt, buy a home, travel more, or just live a more financially stable life, learning what’s important to you and what isn’t will help prevent you from burning out on the way to reaching your goals. Good luck!