MoneyMagpie

Dec 16

Yes, you can achieve financial freedom. Find out how to escape the spiral of uncontrolled debt

Reading Time: 4 mins

When you’re financially free, you can live your life in any way you want. You’re the one in control. Achieving financial freedom isn’t impossible or hard to achieve. You can be free of constraints. If you don’t know how to keep power over your finances and money, it’s a good thing that you landed on this page. The path to financial independence is pretty simple. Continue reading to find out what you need to do to escape the debt trap. 

Be more countercultural 

A counterculture is one that does things differently from mainstream society. People who are countercultural reject the prevailing values and behaviors of society. The question now is: Should you give in to external pressure? Actually, no. If you want to realize the lifestyle that you’ve dreamt about for so long, you must do things differently. Question what you learn from society and what society expects from you. Don’t let others trick you into thinking that you need to go into debt to get all that your heart desires. 

You’re more inclined to borrow more than you can afford if other people do it. Institutions, both financial and legal, take advantage of this cultural attitude towards indebtedness. Understand what your priorities are when making choices. Don’t leave the door open for poor decisions at home and at work. Think differently and take up a position of strength in terms of financials. Getting a credit card or taking out a loan to pay for your education isn’t a bad thing. However, don’t borrow more than you need to. 

Are your savings getting you nowhere? Start investing 

It’s important to save money for rainy days. You don’t have a clue what the future might bring and it’s better to be safe than sorry. A healthy nest egg comes in handy in times of difficulty. This might come as a surprise to you, but putting money aside each month is quite an unproductive exercise. If you want to become wealthy, take one step further and invest that money. Don’t leave it under your mattress. Invest as much cash as you can and reap the rewards. 

Where are you supposed to invest your savings? Well, it all depends on your schedule and risk tolerance. If you’re not willing to wait for too long to attain your financial goals, consider investments that are appropriate for a three- or ten-year period. Here are some examples: 

Certificate of deposit (CD) 

This product is provided by banks and credit unions. It’s short-term security that ensures high-interest rates. A certificate of deposit isn’t liquid. In case you were wondering, the Canadian equivalent is a Guaranteed Investment Certificate, GIC for short. You can invest in a fixed amount of time. The longer the timeframe is, the higher the interest rate is. 

ETF 

ETF is an acronym and it stands for exchange-traded fund. You can trade the entire market as if you were dealing with only one stock. It’s simple to move money between different types of assets. What is more, you can get your allocation into the investment you want in about an hour. Needless to say, there is some risk involved. 

Peer-to-peer loans 

In peer-to-peer lending, you offer unsecured loans to consumers. You’re rewarded with an average annual return of about 11%. You can create a nice income stream through this type of investment. People want to cut the cost of the intermediary, so they will come to you if they need financial aid. 

Create a debt pay off plan 

Commit yourself to stay free from debt. You can’t live from paycheck to paycheck anymore. If you don’t make enough money the month before, you’ll struggle to cover your expenses.  Basically, you won’t be able to pay for medical expenses, shopping sprees, or unexpected emergencies. The only way to keep moving forward is to tackle debt in some way. If you have credit card debt, you need to take action right now. One thing you can do is consolidate debt using a loan. The loan will give you a lower annual percentage rate and help you meet your financial obligations a lot faster. 

Based on your personal circumstances, i.e. your credit profile and the type of debt you’re consolidating, you can take out a personal loan. Verify multiple lenders and compare offers. Don’t miss out on the payments on your new loan. An autopayment guarantees that the cash will go where it’s supposed to. Have a good understanding of how much money you spend each month. You’ll see that the expenses vary from time to time. Spreadsheets can help you record every purchase you make. Make sure that every penny you spend goes into something useful. 

Buy experiences, not things 

Life isn’t about spending all your cash until you reach retirement. It’s perfectly fine to enjoy life while you’re alive, but that doesn’t mean that you should exaggerate with spending. Invest in experiences and not things. Experiences bring about happiness, as opposed to material goods. So, no matter how much you long for that new iPhone, try to resist temptation. You’re better off taking a vacation with your friends. Don’t buy things thinking that they will make you happy. The pleasure is short-lived. 

Experiences are characterized by memorability. You have something to remember for years to come. Just think about how exciting it is to purchase theatre tickets. Going to the show is a completely different experience. The thing is that you don’t need a mountain of cash to have a good time. Do some cheap thrills. Excitement doesn’t take too much effort or money. That is something to keep in mind. Don’t close the door to your financial goals. Cut down on your expenses and boost your experiences. You’ll be happier in the long-term. 

All in all, these habits will help you break free from debt and become financially independent. As long as you’re consistent and you stick to the plan, you’ll get where you want to be. Don’t let slow progress get you down. 

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