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7 Essential Habits For A Successful Debt Free Journey
What does it take to become debt free?
If you've been following this blog, you'll know that I have a deep
hate dislike for personal debt.
I have seen happy homes torn apart by personal debt and even more, people become deeply unhappy and trapped by it.
Debt is very easy to take on and extremely difficult to get rid of.
As such, it should have one of those badges with ‘CAUTION‘ written all over it.
Don't get me wrong, there is an altogether different case for loving debt.
It's certainly made me richer (hate to admit) thanks to leverage… But this is a different animal and isn't personal debt.
It is debt with a unique purpose of creating cash flow and passive income.
As such, not all debt is equal nor designed for the same purpose.
The debt I am referring to is the one that keeps people in jobs they don't like.
It's the one that forces people to take jobs from the highest bidder and kick their morals to the side.
That's right, debt affects human behaviour and calls the shots.
There is nothing fun or wise about taking on more personal debt.
It's a one-way street to doom!
Now that you know this, you have two options:
- You ignore me, carry on and choose slavery.
- Or you declare a relentless war on personal debt.
I am an option #2 kinda guy. I have seen the light and I know exactly what I want out of life.
If you do too, then you need to stare yourself in the mirror and realise that the reflection you see is your only saviour from debt.
That's right, you got yourself into it and will have to lead the charge to get yourself out.
To go to war, you need some insights – Strategy and tactics.
The below 7 habits have worked for me and collectively could be a part of your war chest –
1. Communicate Effectively
Communication has everything to do with achieving debt freedom.
I can certainly think of times when I and Mary have clashed because one of us did something out of sync with our debt goal.
It's important that you form the habit of communicating where you are on the journey and what changes there have been.
Poor communication leads to such things as one person spending on a credit card without telling the other.
However boring it is, you should discuss money activities before they happen.
It not only builds your relationship, but it creates a united team in the war against debt.
Effective communication also means that you have each other to celebrate with as you hit key milestones.
If you're single and in debt, it might be helpful to share the journey with a trusted friend or family member.
2. Keep Debt Visual
I particularly like this one as a visual person.
To keep debt visual, you'd first have to know and understand your current debt position.
I do the visualisation in our home and I convert the one debt we have into easier metrics.
For example, our only debt is mortgage debt, and we've been aiming at it relentlessly each month.
Visually, we present the debt by “Number of payments left to be FREE!”.
We have just over 50 payments left and we have a Freedom date as a result.
That date is in a bright green colour, in bold and changes each couple of months as we throw more money at the debt.
Each month that passes, we tick off one of the payments above and it always feels like a mini victory.
In fact, to further hurt the compounding of the debt, we pay it down twice a month!
The intra month paydown is usually generated from our hustles.
Doing this creates even more visual motivation as we can see the debt falling steeply.
I should mention that this journey of mortgage freedom began when I started playing around with some scenarios on Excel for overpayments.
It became clear to me how game-changing this was and how easily we could recover years of our future from decisions to overpay today.
This visual activity is what I have to thank for getting us to mortgage freedom and full on Financial Independence before 40!
If you’re keen on grabbing my spreadsheet to do this scenario analysis for yourself, then write me an email.
3. Keep Up With The Detail
A hallmark of excellent money management is your ability to remember the detail.
You don’t have to remember every single detail, but you must know your key numbers at least.
Such things as:
What’s your current credit card or mortgage balance? What rate of interest do you pay on your mortgage and when does your deal end?
Is there an early repayment charge and when does it kick in? What rate of overpayments can you make in a year?
The list goes on. Knowing these numbers gets you quite intimate with them, and always gives you an idea of your current net worth.
It also helps you spot the opportunities for reducing your debts by liquid assets that come your way.
4. Stick To Budgeting
This remains my favourite financial control and one that I actually use for effective bargaining.
I automatically shutdown money related activities that are not in the budget.
This not only helps me financially, but it helps me manage my relationships with people.
I ofcourse have fun and invest in the time I spend with close friends etc, but even that activity is budgeted.
Budgets are super effective and are used to run companies, government departments etc.
So I’d most certainly recommend making all aspects of budgeting a compulsory activity in your journey to debt freedom.
The other important thing to remember is that budgeting is not just about expenses. It’s also a plan of how you will distribute your income.
So all probable money making activities should feed into your budget.
How To Create A Budget That Works For You
15 Tips To Help You Stick To Your Budget
How To Budget And Save On A Low Income
Don’t Get Overwhelmed, Get Budgeting
5. Remember Why
We make it a habit to remember why we are doing all this.
I can think of specific moments in my career when I have felt powerless and literally wished the tables could turn.
Winning the battle and becoming debt free is all about winning back power and becoming free.
Just think about that for a minute. How many young mortgage free people do you know?
I sometimes paint Mary a picture of what things would look like when our mortgage disappears.
I have seen my parents go through the journey and hardship of getting rid of their mortgage, and the type of behaviour it can create.
This is compounded where you feel like time is running out (e.g. you’re 50+) and yet you’re far from mortgage free and financial independence.
Rest assured, the fact that you’re thinking of debt freedom now rather than later is one step ahead of most people.
The aim for debt freedom is a choice, and I think once decided, it becomes an exciting and powerful motivation to make things happen.
One such motivation for becoming debt free for us is that we’d like to do something unusual like go on a sabbatical for 1 – 3 months.
With no debt (including no mortgage), such moves start to become a very present reality.
So I’d highly recommend adding a ‘why’ to your decision to become debt free. When the process hurts, which it will, that ‘why’ will keep your head up.
6. Don’t Stress
This sounds abit obvious, but forming a habit of it is a whole different thing.
It’s easy to expect results quickly, but my experience with becoming debt free is that it doesn’t happen overnight.
It takes time. Alot of time in some cases.
So the focus should be on staying positive on this journey and enjoying the process.
There is no day that passes that I don’t think of our mortgage-free goal. However, I think of it from a place of improvement.
When things don’t go my way, I don’t stress about it. I simply focus on the medium term goal and remind myself that we’re moving forward.
I also share my debt-free journey because it not only helps me stay on the path, but it encourages conversation and inspires others.
7. Practice Generosity
You might think that with the focus on debt freedom, life becomes all about you.
I personally see this as a time of the greatest test, and a time not to drop the ball on other things.
Generosity helps us achieve life balance, ensuring we think about other people on the journey to debt freedom.
As I’ve written in the power of generosity and why it pays, there is a direct correlation between our generosity and the 5 standard measures of well-being.
Generosity makes us happier and healthier and isn’t always about money. You can also give your time and help others in various ways.
Below are some tips based on how generosity has been useful in my personal life:
- Better marriage – Giving enhances the quality of marriages and keeps couples closer. In fact, giving gifts is one of the 5 Love Languages and a sign to a spouse that they are appreciated and loved.
- Better life outlook – Having grown up in a generous home, I can certainly say that it has given me a more positive and inclusive look at life.
- Happiness and Joy – This by far has been the biggest impact of living a generous life for me. It is purpose driven and mostly leads to positive reciprocity down the line.
- Children and Society – Ultimately we want a society that is more generous than not. Practicing giving with our children is a good way to contribute to that because they too will grow up givers.
To conclude, debt freedom is a journey worth embarking on and one that will test you along the way.
However, if you apply some of the thoughts above to your situation, I can guarantee that you’ll find the journey alot more plain sailing.
If you’re new to the idea of practically becoming debt free, it’s ok to start where you are. Read more of the posts below and feel free to reach out to me.
I also suggest you sign up for the Free Practical Money Course for a holistic picture of money management.
Other resources on the subject of debt management include:
- Debt Advice Foundation – A leading debt charity offering free debt advice
- Debt Camel – A super helpful debt solutions site run by a friend of mine, Sarah Williams.
10 Tried And Tested Tips To Help You Become Debt Free
5 Debt Realities And What To Do About Them
Why Setting Goals Is Important For Debt Freedom
Are You On A Debt Free Journey? How Have You Kept Yourself Motivated? Please comment below
Do please share this post if you found it useful, and remember, in all things be thankful and Seek Joy.
Great blog Ken – my biggest challenge is practicing delayed gratification. There is only so long you can go on deferring ‘heart’ expense over a ‘head’ one – especially if you’ve been waiting for years to make the expense. Do you get what I mean?
Keep the great content coming!
The Humble Penny says
You do make a point. Although thinking about it, what you think about becomes your actions and forms behaviours that stick over time.
Without a doubt, giving in to some heart desires once in a while is a good thing for some balance.
Donna Paul says
Impressive blog Ken. It will definitely help millions of people out there to cope with their debt issues.
Thanks for the inspiration.
Ken Okoroafor says
Donna, you’re most welcome!