Many people have the tendency to buy things that they cannot afford, and thus, they are living above their means. They might have the car that they want, the house that they want, the latest gadgets, and other things. However, the problem is that they are not paying for those things with their cash. So, instead of representing their wealth, the stuff that they own shows the debts that they need to pay.
What’s the point of having the latest stuff if you need to work hard to pay them with interests? It’s time to radically change your lifestyle and start living in a simpler way.
Here are some tips you can follow to live below your means and avoid wasting your money on unnecessary stuff:
Know How Much Money You Really Have
Try to calculate your income and see how much money that you really have each month. Try to cut it with all the debts that you need to pay in a month, and see how much money you have left. Knowing about this, you should be more careful in spending your money, because you don’t have as much as you think you have. For instance, if your income is $3000, and your debt payment is $1500/month, then what you really have is $1500 to be used toward your daily expenses.
Don’t Fall Into The Idea Of Competition
Most people want to buy the latest and greatest stuff because they don’t want to lose in the competition with their friends or neighbors. They think that by buying the latest stuff, they have taken an edge over their friends or neighbors, and it becomes the way they socialize with others. They want the approval of others to compliment them for the good stuff that they have, at the expense of their own well-being. Try to save yourself from the trap of competition, and stop trying to catch up with the latest stuff.
Focus On Paying Your Debts
Since you have lots of debts to pay, you should focus on paying your debts for the next few years. This requires a lot of patience on your part, as well as will power and perseverance. By focusing on paying your debts, you will be able to free yourself from the financial turmoil that debts can bring to you. Only by being free from debts can you achieve the financial independence that you need the most.
Don’t Buy Any New Stuff Until Your Debts Are Paid
Since paying your debts requires a lot of will power and perseverance, you will be tempted to plunge deeper into debts when you do it. You will think that since you have less debts, you should be able to take another debt. This is the kind of mindset that will keep you in the cycle of debts, and keep you in a state of slavery because of those debts. The only way to break this cycle is to stop buying new stuff until all your debts are paid.
Pay Only The Things You Can Afford
While focusing on clearing up your debts, use the money that you have left to pay for the necessary expenses, and save some of your money. Pay only the things that you can afford with cash. Avoid using credit cards in your purchases, even though you have the cash to cover your purchase. This is the way to slowly adopt your new lifestyle, which is living below your means.