Whether you’re in debt with credit cards, student loans, car notes, or house loans, we all have some form of debt.
The thought of paying off your debt might seem stressful at first but imagine what a debt free life could mean for you.
Debt keeps us from saving money, investing it, and reaching financial freedom.
So, what’s the best method to eliminate debt?
The Snowball Effect
Snow!
There are a few proven methods to paying off debt. We favor the snowball effect method due to its quick momentum and effective results.
This is how it works
You start by paying down your smallest accounts first while making minimum payments on the rest of them.
The approach is to eliminate your smallest debt aggressively. Once you’ve paid off your smallest account, rollover that payment onto your next account.
By the time you’re paying off your third account, the amount equivalent to your monthly payments from the first two will have a drastic effect moving forward on your outstanding balances.
Avoid This Mistake To Stay Debt Free
Don’t spend more as you earn more
In order for the snowball effect to build momentum, you must be consistent and not divert from rolling over once your first debt has been eliminated.
Most people will fill in the space with something else once they’ve paid off their car or credit cards for example.
This spending habit pulls you back to a never-ending cycle.
Remember, once you’re debt free all that disposable income is yours to enjoy. Save it, grow it by investing, and enjoy it!
Don’t let income creep lifestyle keep you from reaching your financial goals.
This is how people making six figures a year can be in financial ruin just as much as anyone making five figures.
Continuously work towards earning more income to pay off your debt more aggressively.
The sooner you payoff one debt, the sooner you can move on to the next while eliminating accruing interest.
Create A Budget
Use a loan calculator for your student loans to understand and save better on bigger payments, as well as finding areas you can budget for, such as junk food, streaming services, and other non-essentials.
You’d be surprised at how much you can save a week by meal prepping instead of eating out daily.
Write down your expenses and see where you can cut back. This strategy will help you not only develop a winner habit but play an important role in your journey to a debt free life.
Mint is a great app that breaks down your expenses and allows you to have an overview on all your account balances.
It Takes Discipline
The fact that you’re here shows your willingness to make this incredible change in your life.
Financial freedom is an amazing experience we all deserve a chance to.
Realistically, only by taking the necessary actions to see our goals through will we truly reach a debt free life.
It’s time to live in the moment and focus on the things that truly matter to us the most.
Be consistent, stay on top of your goal, you have the power to do this.
Like money, credit cards are merely a tool that allows us to build a financially stable world around us. Most people tend to abuse their power and get into financial trouble. Use it wisely and the investment will be well worth it.
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Build Your Credit
The best way to use a credit card is to build credit with it. Don’t apply for a credit card to buy things; this will lead you to financial ruin.
By building your credit you show lenders you’re responsible enough to borrow money and pay it back. Paying your credit card on time will boost your credit score which will allow you to qualify for bigger financial goals such as financing a car or purchasing a house in the future. Your future self will thank you for building your credit score!
Keep Your Limit Below 30%
The last thing you want to do is max out your credit card. This will have a negative effect on your credit score, OUCH! High utilization presents a high risk of falling behind on payments to the lender. Minimize the amount used to keep your credit score afloat. Keep your limit at or below 30%. If your credit line is $1,000.00 use up to $300.00 of credit.
Avoid The Quicksand
The moment you act upon impulsive purchases is the moment you give up your financial freedom. These choices will unfortunately result in a cycle of poor spending habits and lead you towards a world most people are trying to escape. Avoid the impulsive purchases, the transaction can wait.
Be careful when lenders increase your credit line. They will first increase it when you’re doing a great job of paying on time. The second time they increase it is a strategy to trap you in the quicksand. Don’t fall for it! Only use the 30% of credit line on the increase if you’re able to pay for it. You do not want to fall behind or make payments on large purchases. You will end up pay the banks money out of pocket due to the interest.
Smart Transactions
Use your credit card for expenses such as fuel, small groceries, misc. purchases for your home (lightbulb, screws, cleaning products, etc.), and in some cases, for an emergency. What all these things have in common is that they’re fairly easy to pay back for. These are perfect small ticket items to help build your credit score.
Schedule automatic payments in order to avoid late fees. The responsible thing to do is pay your bill on time in order to keep building that momentum that will positively affect your credit score. Late payments never look good to a lender so prove yourself trustworthy and responsible!
Avoid The Interest
Avoid the interest rate by paying your bill in full. Once you start making minimum payments on a credit card your remaining balance will accrue in interest. Remember, a credit card is a tool so use it to your advantage, not for someone else’s.
If you used your credit card for an emergency and can’t pay it in full, close it in two to three large payments. One of the benefits of having a credit card is that if your personal savings have taken a hit, you’re not without temporary help. Be sure to close the credit card, work on your emergency fund, and continue to use it wisely so you won’t rely on it for another rainy day.
On Another Note
Transfer Debt To A 0% APR Card
If you have too much debt on a credit card consider transferring it over to a card with 0% APR in order to avoid the compound interest on it. This will allow you to catch up without any additional fees. Take advantage of not having the interest and reach your goal!
Financial stability is the 3rd level of wealth according to Dan Lok’s 6 levels of wealth pyramid. It is the level beyond financial dependency (level 1) and financial survival (level 2 ). Financial stability bears a financial stress-free lifestyle but requires definite discipline and planning. If you’d like to find out more about Dan Lok’s 6 levels of wealth be sure to check out the video below. Here’s how to reach financial stability at any age.
What is financial stability? Financial stability is the level of wealth when you no longer depend on someone financially, and have essentially stopped going paycheck to paycheck. Financial stability requires that:
Your income is greater than your expenses
You have anywhere from 4-6 months of monthly living expenses saved up
You have no bad debt (high credit card debt, bad investments, etc.)
There is no set income number to reaching financial stability and you can reach it at any age. It does not matter how you make this money or how much you make, but how you manage your money.
E.g.: A person earning six figures a year cannot be financially stable if they are living paycheck to paycheck with no money set aside for an emergency. A person earning significantly less can be wealthier by simply having the discipline to manage their personal finances responsibly.
So How Do You Become Financially Stable?
First, you must truly want to become financially stable. In order to reach financial stability at any age it will require sacrifices involving budgeting, saving, and lots of planning.
Assuming you are not financially dependent on anyone and you work for yourself, you must learn to stop living paycheck to paycheck. This is achieved through gaining a set of skills and financial knowledge from which you can put to use.
In short, you will need to:
Look At Your Bank Statements and Budget
Increase Your Income
Live Below Your Means
Increase All Monetary Accounts
Develop Winner Habits
We break down in complete detail how to stop living paycheck to paycheck here. Reach financial stability at any age by living below your means and eliminating living paycheck to paycheck.
Write Down Your Financial Goals
It is important to write down your financial goals in order to materialize said goals. Type them out in a word document or write them down in a journal. Your subconscious mind sees this and allows a lot of powerful and intuitive things to occur in your mind. Working towards your financial goals will become second nature.
Writing down my goals helped me reach financial stability because I was constantly setting goals for myself. Keep planning and keep writing down your goals.
The comfort zone is where all dreams and goals die. Be prepared to leave your comfort zone if your goal is to reach financial stability. This step will require you to ditch the habits prohibiting you from reaching your financial goals.
If you want to reach financial stability you will need to develop some habits you might not like at first. This means delaying gratification to meet your future goals.
Take Action To Manifest Your Financial Vision
Begin to set things in motion by taking affirmative and disciplined action. Stick to your budgeting plan and keep working towards eliminating unnecessary expenses while earning extra income to pay off debt. Think in terms of weeks and months. Look at the progress you make at the end of every week and every month.
Learn to reach financial stability at any age by continuously taking action towards achieving your goals.
Take action every day and you’ll grow every day.
frank nez
Let Your Goals Motivate You
Record your progress to boost your motivation. This helps to visually see how much closer you are to accomplishing your goals. Motivation is at its highest in the beginning and may begin to settle as time passes. When it begins to subside, remember why you started in the first place.
The process will take time. Remember, one step is one step closer to achieving your goals. Reach financial stability at any age by staying motivated throughout your financial journey.
Some ways to stay motivated include:
Watching successful mentors on YouTube
Reading self development books
Following motivational pages on social media
Maintaining focus on your aspirations
Reaching financial stability requires you to ditch old habits and gain new ones.
Another great way to stay motivated throughout your journey to reach financial stability is to never stop learning. Continue to educate yourself while you take on this amazing responsibility.
There is a lot of great content on YouTube from which you can gain new perspective and knowledge from. Some of our favorite people include Dave Ramsey (saving), Grant Cardone (motivation), & Andrei Jikh (investing). You will find loads of content that can benefit you when you envelop yourself with financial betterment.
Franknez.com writes a lot of content relating to your financial benefit. We take pride in helping our readers become financially confident.
Tip: Learn how to reach financial stability at any age by learning from all type of successful people.
How Do You Reach Financial Stability At Any Age?
You reach financial stability when you decide to become financially literate. Financially literacy is the understanding of managing your personal finances responsibly.
You can only fathom financial literacy if you have the willpower to seek the knowledge. You must truly want it. No amount of money greater than what you currently earn can make you become financially stable. However, it can certainly become a tool to help you reach financial stability.
Every post on Franknez.com plays a dedicated role to working towards and building your financial future. Reaching financial stability is a mix of several habits you must learn to develop before attaining this level of wealth, just like any other level of wealth.
Financial Stability Is A Mental Stability
Mental stability manifests financial stability due to a variety of factors of which include:
Discipline
Planning
Desire To Learn
Commitment
Time
Sacrifice
This level of wealth is where you decide it’s time to change your life. It’s when you stop doing a variety of things that were holding you back and focus on taking control of your destiny.
In other words, it’s when you replace your bad habits with developed winner habits. Only you can truly decide financial stability for yourself.
If you found value in this post comment below and let us know how you’re taking the necessary measures to reach financial stability! Kuddos for being here today.
It is never too early to begin preparing for an economic downturn. What you do today can save you tomorrow. If you weren’t prepared for the coronavirus disruption be sure to also share this with a loved one. Here’s how to better prepare yourself for the next recession.
Pay Off Big Debt
One way to better prepare yourself for the next recession is to pay off big debt. Paying off debt will reduce the amount of monthly payments you have which will result in having more funds available to save or invest.
Paying off debt also lifts the weight off your shoulders knowing you don’t owe any parties anything. Pay off your vehicle or any open credit cards. If you have a lot of debt find out what strategy we suggest using when it comes down to paying thousands in debt here.
Have An Emergency Fund
Having an emergency fund is one of the single most effective ways to better prepare yourself for the next recession. Think of your emergency fund as a net from which you can fall on should things disrupt your plans. Recessions can lead to several hardships including the loss of a job or business. Having an emergency fund allows you to have access to capital in the event that the worse case scenario occurs in your financial world.
If you’re stuck on exactly how to create an emergency fund read about how to start ithere. Franknez.com walks you through on creating a goal and then having your savings work for you so that your money multiplies through compound interest.
Our mission is to provide our readers with real world experience and advice to help further their financial knowledge and secure their financial future.
frank nez
Live Below Your Means
A great suggestions as to how you can better prepare yourself for the next recession is to live below your means. So what exactly does it mean to live below your means?
To live below your means is to live significantly below the threshold of your annual income.
Living below your means allows you to have financial breathing room. As a result, you’re able to save more money and increase the amount dedicated to your emergency fund. Here are some ways on how you can live below your means:
Downsize your home if you don’t need the ‘excess’ space.
The new vehicle can wait (practice delayed gratification)
Don’t over-indulge in jewelry or high fashion clothing (there’s a time for it)
Have less takeout (keep it in moderation – set a budget)
Resist the new gadgets – make due with the current (for now)
When you live below your means you essentially grant yourself access to manageable monetary means. Prepare yourself for the next recession by eliminating the stress of going paycheck to paycheck.
Continue Budgeting
Budgeting in general is a great winner habit to have. Budgeting long-term will help you achieve your savings goals and keep you living below your means. A great way to keep track of your expenses is to frequently log in to your bank account(s) and build awareness of where your money is going. We also suggest downloading the app MINT by Intuit. It tracks down your expenses and keeps record of all your accounts. It makes it super easy to keep quick tabs on your accounts.
Don’t Depend On One Source Of Income
What occurs when you depend on one source of income and then all of a sudden it’s completely gone or cut in half? This is what happened to 22 million Americans who filed for unemployment during the coronavirus pandemic.
Learn to better prepare yourself for the next recession by acquiring additional skills and knowledge and learn how to create more than one source of discretionary income. Franknez.com has posts on how to start an online business and grow it, how to earn passive income, how to start a blog, side hustle ideas & so much more. Be sure to subscribe to our newsletter to be notified when new posts are published!
Prepare yourself for the next recession by generating income from a variety of sources.
Tip: By acquiring multiple sources of income you ensure yourself financial growth and financial security.
Develop A High Income Skill
What does it mean to develop a high income skill? This means earning a promotion, developing skills to attract higher paying opportunities, selling more, or becoming involved in anything that will increase your current income.
By increasing your income you gain monetary means to pay off debt and save money for a rainy day. This is a great way to prepare yourself for another worse case scenario such as a disastrous recession. If it becomes too difficult to develop multiple sources of income or it’s not within your time limitations to do so, developing a high income skill can certainly be a great way to compensate.
Tip: Do not spend more as you earn more.
Be sure you continue to live below your means as you increase your income. You will have breathing room and gain the confidence to face any financial challenge that comes your way. If you find yourself in need of motivation we suggest reading 10X by Grant Cardone. This book discusses how you can increase your income and meet your goals by essentially putting in 10X amount of effort in everything you do. Grab the book here.
Choose Your Industry Well
One way you can better prepare yourself for the next recession is to choose your industry well. Take a look at the industries that thrived during the coronavirus pandemic vs the ones that didn’t. This is a sure way to identify which sectors are a ‘safer’ career choice.
Industries that thrive during recessions include:
Healthcare
Logistics
Accounting
Biotechnology
Automotive
Economists
Utility Companies
Funeral Services
Veterinary
Courier / Freight
Telecommunications
Online Businesses
Become recession proof by choosing a great career that won’t die down during an economic distress.
Increase Your Credit Score
The people who are getting approved for 0% APR credit cards and for home loans are those with a great credit scores. Keep in mind, recessions are also the time to learn how to identify new opportunities. Qualifying for an affordable home while the market is low could be your time to make that move; it might not. Perhaps a 0% APR credit card can help eliminate other credit card debt and help you further your personal finances. A high credit score opens opportunity, even during a recession. Start building your credit now; your future self will thank you.
Another tip on how to better prepare yourself for the next recession is to diversify your investments. Don’t keep all your eggs in one basket. Franknez.com has posts on how to earn interest from a high yielding savings or money market account, how start an online business, and how to invest in the stock market step by step!
Franknez.com teaches many ways you can diversify your income!
Diversify your investments by allowing your money to work for you in a variety of ways without you having to put up with much maintenance. This strategy will require you to take some personal risks though it isn’t as scary as it actually sounds! Risk plays a big part in securing your financial future. Prepare yourself for the next recession by learning this important wealth building skill.
Here are some ways you can prepare for a recession by diversifying your income:
Move money into a market or high yielding savings account
Build a portfolio with index funds and ETFs (stocks)
Learn to identify people of value who can play an important role in your life when it comes to health, career, finances, mentorship, and partnerships. It is important to build relationships with people in these categories because they become connections. These links of relationships are known as a network.
Better prepare yourself for the next recession by building a strong network as it can prove useful during the times of hardships. If you lose your job you might know someone you networked with who might be able to help. Whether its recommending you to an employer or even going to the greater lengths of personally hiring you, networking opens opportunities.
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Please subscribe to our newsletter if you find value in our content! We are here to help you make great financial decisions in order to help you secure your financial future. Let us know what you’re doing to become recession proof. If you have other tips on how to better prepare yourself for the next recession please share with our readers!
