Why So Many People Fail at Becoming Debt Free
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Here in the PF blogging world, we’re surrounded by people who either have or are working to become debt free. We know that this is the norm in our little world, but almost all of us also know a not-so-small handful of people who have tried, failed and given up at becoming debt free.
So what’s the difference between those who make it to debt free and those who don’t? And how can you be sure that you’re one of the ones who will achieve your goal of becoming debt free or wealthy? Consider these reasons for failure, and then make sure you don’t fall into these sabotaging traps:
1. Lack of Education Doesn’t Help You Get Debt Free
So many people decide that they want to be debt free, or wealthy, without having any idea of what they’re doing. t sounds pretty simple, in theory: you pay off your debt, and then you save/invest money, right? However, without the proper education, you’re setting yourself up for failure before you even get off the ground.
Just like you wouldn’t drive a car without first learning about the rules of the road and of the vehicle, it’s important not to jump onto your road to becoming debt free without learning how to navigate it. Like any goal, the road to being debt free is full of potholes and roadblocks.
A good personal finance education will help you to be aware of what to expect on your journey, and will help you know how to navigate around those bumps in the road. Make the smart choice to read about what successful people have done to make it to debt freedom before going on that road yourself.
2. Lack of a Plan
If you’re planning on heading on a cross-country trip for the first time without your GPS or map, you’re likely heading for trouble. Surveys have proven that successful goals are SMART (Specific, Measurable, Attainable, Realistic, Timely) goals.
If you’re jumping on your path to debt freedom without specific short, medium and long-term SMART goals, you run the risk of giving up due to a feeling of being lost in the woods. No matter how minute they may seem, make a plan with goals that work for you and your specific situation before you start your debt payoff journey.
Your first short-term goal may be as simple as “Make a budget and stick to it” but that small goal is a very crucial part of achieving long-term success.
3. Lack of Understanding
Another reason that so many people fail at their goal to become debt free is because they don’t understand the magnitude of their debt. People with a large debt load often fail to see that trouble could easily be lurking just around the corner.
One job loss, one large medical bill or home repair bill, could quickly change their situation from paycheck-to-paycheck into “we’re losing the house.” It’s vitally important if you’re contemplating a journey out of debt that you understand why it’s so very important that you rid yourself of the debt.
Sit down and take a good, long look at your current debt situation, fully grasp the magnitude of the dangers of living with a large amount of debt, and gain the understanding you need that will keep you on track with the goals you’ve set.
4. Lack of Vision
This is likely one of the most important parts of a successful journey to living debt free. Whereas a good understanding of your debt will motivate you through fear, a good vision of your life without debt will motivate you through excitement. First on the list to obtaining vision in this area is to write down what you will do when you are debt free.
How will your life change? Will you be able to leave a job you hate? Provide a better education for your children? Travel around the globe? Once you get a vision of your debt free life, use it to be the deciding factor in all spending decisions. When you’re faced with that potential latte’ order, use your vision to decide what’s more important to you: that short-term “yum” factor, or the long-term “traveling” goal.
You’ll likely quickly decide that being able to retire at 55 instead of 65 is well worth giving up the latte’, provided you’ve done a good job of establishing your long-term vision of the good life in your head.
By following the above guidelines and making a plan today (or at least the beginnings of one) you can make sure that you’re one of the ones who succeed at your goal of becoming debt free!
What are your “must have” tips for making sure you achieve your financial goals?
Photo courtesy of: Images_Of_Money
John is the founder of Frugal Rules, a dad, husband and veteran of the financial services industry whose writing has been featured in Forbes, CNBC, Yahoo Finance and more.
Passionate about helping people learn from his mistakes, John shares financial tools and tips to help you enjoy the freedom that comes from living frugally. One of his favorite tools is Personal Capital , which he used to plan for retirement and keep track of his finances in less than 15 minutes each month.
Another one of John's passions is helping people save $80 per month by axing their expensive cable subscriptions and replacing them with more affordable ones, like Hulu with Live TV.