November 23, 2020

You truly can’t consider yourself financially stable if you are carrying debt, and although it feels difficult, it is possible to become debt-free. Do you understand the impact of debt in your full financial picture? You may bring in a good salary, pay your bills on time, have the ability to buy what you need and live comfortably with a bit of savings, and you may think this means you’re in good financial shape. However, if you have debt, the value of your money is much less than you think. If you’re carrying debt, your overall financial picture, especially of what you have in savings, isn’t as healthy.

The Value of Money VS. the Impact of Debt

Looking at Your Full Financial Picture

The first thing you need to do is look at your full financial picture. This includes looking at the actual amounts of your:

· Income

· Your fixed monthly expenses

· What you have in savings

· Your outstanding debts

These numbers can be scary, but facing them is the best way to start. If your debt is higher than your savings, you need to take care of it. If your expenses are more than your income, that’s another problem that needs attention. Knowing these numbers will help you develop a plan to make a budget, stick to it, pay off your debts, and become financially successful.

How to Get Out of Debt

You didn’t get into debt overnight, so don’t expect to get out of debt overnight either. The first step, after you’ve looked at your full financial picture, is to control your spending and keep it as low as you can. This may mean some time of living frugally. Look at lowering your monthly expenses as much as possible, so you can throw as much money at your debt. Many financial experts are there to help you if you need it. The “snowball method” is highly recommended because with every goal you meet, you gain momentum. Pay all your minimums except for the debt with the highest interest rate, and pay as much toward that as you have left. Once that debt is paid off, apply that money to the next debt, and continue moving down the line. Work the numbers, put together a plan, and stick to it.

Living Debt Free

Once you’ve attacked your debt and paid it off, it’s important that you don’t take on more debt. This is a problem that many fall into. Once you have a stable financial future, focus on your budget. If you aren’t paying off debt, you have more income coming in each month. After you pay your expenses and put money toward saving for retirement and an emergency fund, you know what you have left to allocate where you want it to go. Pay attention to your budget, adjust as necessary, plan ahead and save for big purchases, and make sure you know where your money is going 100% of the time.

When you are just beginning to attack your debt and look at your full financial picture, it’s easy to become overwhelmed. It doesn’t matter how you got into debt. Getting out of debt is financially freeing. Living without financial stress will allow you to enjoy the full value of your savings. Contact Safe Money Partners for guidance on how to get started toward your goal of financial freedom. We have a proven method to financial success, regardless of your financial status. Let’s start the conversation today.

photo of Jeff Mohlman

By Jeff Mohlman

Jeffrey has developed a comprehensive network of financial planning and estate planning experts who work for their client’s short-term and long-term goals. Today, the approach he incorporates for his clients follows three basic tenets: 1) being debt-free, 2) maximizing after-tax retirement income, and 3) protecting their estate from unforeseen risks.