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As an adult, continuing education is just as important if not more than when we were children. If we stop learning, we stop growing. The financial industry is constantly changing so it benefits us to keep up to date with the latest trends.
Even though personal finance may seem to be common sense to some of us, it is certainly not common sense for the majority. The average American owes thousands of dollars in credit card debt.¹ Many of us do not have adequate savings in the event of a job loss or unexpected financial expense.
With these two variables, most of us are on the brink of a financial disaster waiting to happen. However, with just a few adjustments, we can protect ourselves from being another financial statistic.
1. Make Debt A Priority
It should not be normal to be in debt our entire life. So many of us have succumbed to the idea that we will always be in debt and owe someone money. That someone could be a credit card company or our mortgage lender.
Most financially responsible people have a mortgage and do not think that a mortgage will ever be paid off. The majority of Americans move several times throughout their life and take out a new 30-year mortgage each time. With each move comes more time added to the loan that never seems to end.
In reality, there is a group of people that have paid off their homes and live without any mortgage payment. Can you imagine the freedom you would have without a mortgage or rent payment? It’s a real possibility and should be expected. We need to change our mindset that says being in debt is a way of life. Make paying off debt your priority and watch the freedom that comes with it!
For more information, refer to my related article, The Debt Payoff Playbook.
2. Automate Your Investing
When your debt is paid off, except for your mortgage, make sure you automate your investing. Investing has become much easier with the help of technology and now you can set up automatic payments or a percentage of income to come out of your checks. By setting up auto investing, you do not need to rely on your memory or willpower to put aside a certain amount of money each month to invest.
Automation takes our financial temptations away and forces us to invest. After a while of automatically investing, you will forget how much money you really make and learn to live off what is left. Set yourself up for success!
The ultimate goal is to automatically invest 18% of your income in order to retire financially free.
3. You Need Medical Insurance – And Possibly Life Insurance!
With medical costs at an all-time high, the risk you take of not having any medical insurance is far too great. If you sustain an injury that lands you in the Emergency Room, you could easily be on the hook for hundreds of thousands of dollars in medical bills. In addition, you can not ignore medical bills and hope they go away. Creditors will come after you and destroy your credit if you are unable to pay.
Medical companies also have the ability to place a lien on your assets to include your mortgage if you are unable to pay for the medical procedures. Liens and wage garnishment are some of the tactics that can be used in an attempt to recoup medical debts. I wrote an earlier about the damage unpaid medical costs can do to you personally in: Can Unpaid Medical Bills Go On Your Credit?
If you have people who rely on your income or services and you still have debt, you absolutely need term life insurance. In a worst-case scenario where you are involved in a life-ending accident, imagine the financial mess your family would be left with. Without income or life insurance, they would be forced to deal with the emotional trauma as well as the financial devastation. Take care of your family and provide them with the most comfort you can by not allowing finances to be one of their stressors if you die.
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4. Avoid Purchasing A New Vehicle
Vehicles are a terrible investment. They lose much of their value the moment you drive them off the sales lot and they continue to decline every year thereafter. Put your money towards assets that appreciate over time rather than depreciate. Do yourself a financial favor by purchasing a “new to you” used vehicle.
You will save yourself the high purchase price of a new vehicle yet still have a reliable vehicle to drive. Many vehicles can last over 200k miles today. If you don’t believe me, come take a drive in my 2007 Nissan Sentra that has 186k miles on the original engine and transmission! Check out my related article, 5 Reasons Car Loans Are A Bad Idea.
5. Avoid Burning Bridges
If you decide to change jobs, ensure you leave on the best terms you can. As much as you want to go out in a blaze of glory and finally tell your boss everything you have wanted to say all these years, don’t do it. You never know if you will need to come back to a previous job you left.
A friend of mine recently found herself in this exact position. Andrea, from Saving Joyfully was told her department was downsizing and she would be without a job. There is no way she would be able to cover her bills with this loss of income, so she went out on a limb and contacted her previous employer. Lucky for her, she left on great terms and was offered a job right then and there. You never know what position you will find yourself facing in the future. Don’t burn bridges if you can avoid it!
6. Find Time To Give Back
When you find yourself in the mundane circle of life, take time to volunteer and give back. By helping those less fortunate than yourself or volunteering for a great cause, you will quickly realize how blessed you really are. Take time to refocus on what really matters in this life. Doing good for others is great for the body and soul!
For instance, I occasionally help coach kids sports teams at a local church. I do not always want to go to the practice but I have never once regretted my time with them. Get out of the rate race of this life by slowing down and taking in meaningful time with those you love.
By doing these simple tips, you will be well on your way to financial freedom and much less money stress in your life! Thank you so much for reading and if you could do me a favor and subscribe below I would appreciate it! You will get my posts by email so you never miss a post. Keep at it my friends, you work too hard to be this broke!