Implementing extreme lifestyle changes may just be what you need to make sure debt consolidation will be a success. If you are in a tough debt situation, that is an indication that there is something wrong with your life. It may be the way you handle your money. Or maybe, it is your source of income. Regardless of the reason, one thing is for sure – you need to change something in your lifestyle.
Sometimes, getting out of debt is not just about paying off your debts. You need to make sure that you identify the reason why you are in debt in the first place. Most of the time, you will realize that your lifestyle is to blame. In fact, one report revealed that 55% of Americans spend more than what they earn. If you are overspending your budget, that can really end up in mountains of debt.
If you find that you have the same overspending lifestyle, you need to change and you need to do it fast. It does not matter if your debt consolidation program is very effective. If you fail to correct the very reason that got you in debt, then you will only land yourself in debt once more.
Lifestyle changes that can make debt consolidation easier
It is not just about correcting mistakes. Sometimes, you need to make extreme lifestyle changes that will revolutionize your financial position. If you are in the midst of a debt consolidation program, there are changes that will make it easier.
Here are some of the changes that you might want to implement.
Getting a smaller house
Do you know the tiny house movement? You may laugh at how extreme these people are but do not be quick to think of them as weird. These people know what they are doing. Most of these people say that they opted to live in a tiny house because it helped improve their lives. If you look at the statistics, 6 out of 10 tiny house owners do not have credit card debt and more than half have more savings in the bank compared to other homeowners. It is not just about tiny homes being cheaper than the average house. These also cost less in terms of upkeep and utility bills.
If you think that you cannot downsize into a tiny house, that is okay. At the very least, move into a smaller home. It will save you a lot of money. Anything extra that you save can be used to pay off your debts.
Having only one car
The truth is, you can probably live with only just one car. You can take turns or carpool. This is something that you might want to really consider. A car depreciates over time. Even if you keep two cars, it will be valued a lot less than when you bought it. That means it is not really a good investment. It will make your life convenient but it will cost you more in the long run. With gas prices rising and car maintenance becoming more costly, you might be better off with just one car in the family.
Cutting back on entertainment splurges
While you are trying to make drastic lifestyle changes to help with debt consolidation, you might want to look at your entertainment expenses next. If you want to improve your personal finances, you need to be careful with how you spend your money. This is especially true for expenses that are not necessary for your survival.
While you also need to reward yourself every now and then, you might want to choose something that is not too expensive. After all, the money might be better off to be used as debt payment.
If you are worried about your social life – don’t be. Just initiate the activities so you can make sure that it will not be too expensive. And also, make sure that your friends understand your financial situation. You do not have to go into details but at the very least, you should let them know that your budget is tight at the moment.
Using your free time to make money
If you are trying to get out of debt, you should avoid wasting, not just money, but also your time. While we have to relax and destress every now and then, it is also important for you to utilize your time wisely. Opt to use your free time to make more money. The higher your income, the more you can use to pay off your debts. This may involve some lifestyle changes since you will be spending more time working. It will require sacrifices but it should all be worth it especially if it makes your debt consolidation efforts successful.
How your lifestyle affects debt consolidation
Any form of debt relief will be influenced by how you live your life. This is why you need to be very careful with how you live from now on. It is not only during debt relief. You should also implement lifestyle changes even after you achieve debt freedom.
There are a couple of reasons why your lifestyle can influence your debt consolidation efforts.
It affects how you spend
Your lifestyle will dictate how much you will spend each month. If you live in a big house, you will naturally spend a lot more in terms of upkeep and your heating/cooling bills. But if you have a smaller home, you should expect to spend less at home.
Also, if you love to eat out or if you prefer to go on vacations all the time, that can also affect your monthly budget. If you choose a more simple lifestyle, that can significantly reduce what you have to spend each month.
It influences your priorities
Another thing that you have to consider is the fact that your lifestyle can dictate your priorities. If you live in a big house, your priority will be that property. Most of your finances will go to that because you do not want to lose your house. It does not matter if you have accumulated a lot of credit card debts. You will prioritize your mortgage payments over it.
If you like to travel, you will prioritize it over your other expenses. You need to consider how your lifestyle is affecting what you deem is important in your life.
It shapes your financial future
Finally, your lifestyle will have a profound effect on your financial future. If you are splurging your money on unnecessary things, you will end up with a shaky financial position. But if you have the habit of making smarter spending choices, then you will not compromise your future at all. If you put your money in the right places, you will end up with a better financial future that is more secure and stable.