Americans have higher levels of personal debt and lower rates of personal savings today than ever before. It wouldn't be unreasonable in the face of personal circumstances such as these to buckle down and do everything in one's power, easy or hard, to erase debt. Before you take the stairs to setting your financial house in order, you do want to explore how far the best pain-free methods can take you. But you can only do this if you aren't in a hurry to get out of the red. Little sacrifices can only add up to something substantial if you give it a lot of time to work - in the order of many years. For many people in debt, time is a luxury they don't have. Either, they are approaching retirement age quickly, or they find themselves paying so much in interest on their debt that they are losing their shirts servicing it. If you won't happen to be in a hurry to turn your life around, these are the steps you need to take, even if the sacrifices you make will be large ones.
Most people, when they consider a house to buy to live in, go for the biggest house they can afford. The rule of thumb for a long time has been that you are to stretch yourself and buy the best house you can if you set aside a third of your income in mortgage payments. Well, those were the old rules. Today, if you are someone who is trying to get your financial ship on even keel, you want to actually sell the large house you live in at the moment (that's assuming you can get a reasonable price on it) and move into quarters that are as small as you can possibly survive in. This is where you could find that your college dormitory lifestyle could teach you something. It isn't that bad for a small family to cram itself into a two-bedroom apartment. Basically, you can either have breathing room in your budget or in your house. You can't have both.
Have you been finding it hard to adhere to personal-finance advice that urges you to save 10% of your income every month? If you are trying to erase debt as quickly as possible and you to get yourself into some state of sanity, you know that you can do far better than 10%. Try 40% of your take-home pay. 10% is the lazy savers figure. For someone who is willing to work extra hard on their financial health, learning to live on half their income is what will actually get it done.
You've eliminated your large house and decided to live in more cramped quarters. But that's not all you need to eliminate. How about getting rid of the car altogether? Cars are a great convenience; there is no denying it. But cars, with their gas bills, repair bills, insurance costs and parking charges, are really a luxury to someone who's trying to raise debt in their lives. You've got to learn to rely on public transportation. On the upside, think of how all the walks will help you lose weight. Learn new moves such as always buying everything used, and getting rid of all your plans to buy new gadgets. A Netflix subscription to go with your flatscreen TV, premium cable, video games, a device that you buy apps for - all of these cost you hundreds of dollars every year. Make sure that you take out a red pen, and cross all these out.
And finally, make sure that you unplug yourself from the commercial madness that Christmas has become, and you should be well on your way. But of course, all of these, are about pinching pennies. While this does stanch the flow of money out of your coffers, it does nothing to fill them afresh. Starting a business after work is your only way at any real success at turning your life around.
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