To get out of debt, you need to develop a couple of habits. Debt freedom is not something that happens overnight. It is also, admittedly, not an easy feat to accomplish. You will go through a lot of sacrifices and temptations. You need to hold steady to your commitment to pay off all your credit obligations so you can maximize your financial position.
As with any endeavor, your journey to get out of your debt situation will be filled with lessons. These lessons come with an opportunity to develop habits that will allow you to change your behavior when it comes to managing your money. If you want to make debt freedom last long, you need to change the habits that you had prior to getting into debt.
This is easier said than done. Americans are notorious for their preference to get into debt. 8 out of 10 Americans are in debt. Don’t think this is limited to young people with student loan debt and those with mortgages. Believe it or not, a lot of people are starting to carry debt right into their retirement. Debt is not choosing an age. All generations alive today have some form of debt to their name. What makes all of this scary is the fact that almost 7 out of 10 Americans think being in debt is a necessity. Although they would prefer to not be in debt, they believe it is something they cannot avoid. For instance, if you want to own a home, you need to borrow money in order to afford it. The cost is just too high for you to wait and save up for it.
3 Habits You Should Retain After Paying Off Your Debts
It may be true that the majority believe that being in debt is a necessity, but that does not mean you should not try to stay out of debt. If you have just achieved debt freedom and you want to stay that way, that is an admirable decision. But you have to be warned that staying debt free is a feat that not everyone is capable of maintaining. With a society that views debt as a necessity, this can be as difficult as being forced to attend an eat-all-you-can party while on a strict diet.
29% of Americans have admitted that they are ashamed of their finances. They wouldn’t let family and friends know their specific financial condition if they can help it. This feeling of embarrassment gets worse as the generation gets younger. That means Millennials are the most embarrassed when it comes to their financial position.
If you want to stop being ashamed of your current financial situation, you may want to stick to the habits that got you out of debt. Although it is difficult, I am not saying that maintaining debt freedom is impossible. You just have to make sure that you will retain the habits that you followed while you were trying to get out of debt.
Here are the three habits that will prove to be useful in improving your financial position even further.
Habit 1: Stick to your budget.
A budget is one of the basic tools that you used to help you achieve debt freedom. Most of the time, people got into debt because their expenses were greater than their income. While you were getting out of debt, you had to either lower your expenses or increase your income. Usually, those going through debt relief change both – they lower their expenses and find ways to increase their monthly income. Whatever changes you did in your budget, if it helped you get out of debt, you need to continue using it. Do not change your plan just because you made that final debt payment. Make a commitment to stick to your budget so you can continue practicing the next two habits that you still need after debt freedom.
Habit 2: Save what used to be for debt payments.
Since you will be sticking to your budget while getting out of debt, you have a huge opportunity to increase your savings. What used to be allocated for your debt payments should now be directed towards your savings accounts. There are many ways you can use that money wisely. For starters, you can use it to increase your emergency fund. One-third of American consumers do not have money put aside for emergencies. If you do not want to go through what you did in the past, stick to your budget and save what used to be your debt payments. Once your emergency fund is enough, you can direct this extra money towards an investment account that can help improve your financial situation.
Habit 3: Maintain constant vigilance when spending.
The final habit that you need to implement even after debt freedom is maintaining caution whenever you spend. That extra money that you are putting into your savings can be very tempting. Keep yourself from splurging just because you have a lot of money in your hands. Just as you were very cautious of your spending while you were trying to get out of debt, you need to do the same even after. Sure it is okay to spend some money to celebrate that last debt payment. But do not overdo it. Continue to be wise about your spending choices.
If you developed other habits while getting out of debt, feel free to keep on doing them. Share those habits with the rest of us by commenting below.