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We have a great contributed post today on getting on the path to financial freedom by getting out of debt. Let us know your experiences and thoughts in the comments!
Financial freedom is often described as having both the time and money to live the life you want to live - essentially it could be summed up by the phrase “life on your terms”. For some people this could be to watch each and every sports match their child participates in, whilst for others, it could be to travel the world in five star luxury.
Either way, money has been described as being similar to oxygen in that it’s an essential fuel we require to live, and rather than strive for more, more more - it might pay to look at the destination we actually want to get to; the place that will make us feel content and satisfied, emotionally, and then work out the most efficient way to fuel your tank.
Financial freedom, can however feel like an elusive goal that will forever be just out of reach for them and something to be enjoyed by “other people” who are in more fortunate positions than they are. This is particularly true if someone is unable to work due to an accident they’ve had, in which case seeking advice from a specialist law firm such as https://www.derricklawfirm.com/ might be a good idea; not that one should consider litigation as a route to financial freedom - but for restitution, meaning to be compensated for the loss incurred.
This article faces the fact that a lot of people, right now, are enduring financially tough times. Therefore, we’re going to focus on the very first step to financial freedom - which is to get out of debt and start keeping on top of your finances. This first, basic step, is like the bottom layer of a pyramid; without this fundamental layer in place you’ll never have a firm foundation on which to build financial freedom.
The challenge with debt is that it can be a vicious cycle that quickly spirals out of control, and rather than bury your head in the sand like most people, you’ll want to be proactive and take the “bull by the horns”, so to speak. Being in debt is often a slippery slope due to the interest and late fees that accrue on overdue payments - and the situation can quickly snowball out of control.
One thing’s for sure, debt can seriously affect your mental health and similarly a poor state of mental health can seriously affect your financial health. This guide https://www.moneysavingexpert.com/images/attachment/mentalhealthguide.pdf offers some great advice in terms of this.
For most people, having debt in itself, isn’t particularly stressful - it’s the debt collection activities that happen when people fall behind and the constant worry about what could happen next -- it’s the phone calls... the threat of a ‘home visit’... the threat of court action, and even the prospect of bailiffs coming to remove personal items from your home.
Being pursued for debt can be an extremely stressful situation, and often times when people are in a serious financial position they are pursued by multiple creditors with multiple streams of debt collection activity. Due to this, many choose to be like a turtle and stick their head back in their shell; avoiding interaction with their creditors. However, when it comes to debt avoidance really isn’t the best strategy, it can provide temporary relief but it isn’t a long-term solution.
There’s a large difference between good debt and bad debt. For example, the prospect of consolidating your debt into one larger loan in order to pay off the smaller fragments of debt offers immediate and permanent relief from multiple creditors banging at your door… it can start to repair your credit rating in the sense that you are no longer making several missed payments each month… and presuming you keep on top of the payments for the consolidation loan, it will actually start to rebuild your credit score, and save a lot of money (due to the reduction of late fees).
In summary, the first step to financial freedom is not to go out and create a side hustle or go on Shark Tank to pitch a fantastic business idea - it’s not as glamorous or fun - but getting out of debt will allow you to lay firm foundations on which to build a stable future - so this first step is vitally important to reaching your goal of financial freedom and shouldn’t be underestimated.