Why You Need to Rethink Consumer DebtJan 31, 2018
A fresh year means another opportunity to set financial goals and eliminate your consumer debt. But setting goals isn’t enough — you also have to be honest about your debt, and your consumer behaviour, to avoid and eliminate debts that are impacting your financial situation.
How to rethink debt
In order to affect your debt, the first step is changing your perspective. Here are some things to consider about debt:
- Some debt is useful. Know where you are in your life, and whether debt helps you achieve the goals (student loans, for example) that will translate to a better financial future.
- Debt isn’t like a self-cleaning oven. You have to acknowledge its existence, and work hard to eliminate it. The good news is, you’re in control.
- Even a good financial plan and debt repayment plan will need to be rejigged from time to time. As circumstances change (job loss, a raise, expanding your family, etc.) so should your plan. Review how you’re paying down your debt and when you have the opportunity to pay more do it (think income tax refund, gift of money, or a pay raise).
- Even though you may have debt, it’s not an excuse to spend irresponsibly and accumulate more. The answer to financial frustration or fear is not more consumer debt. “Debt traps” increase your debt and put you further from your goals.
Bruce Sellery at Moolala writes about why making a financial plan is so important for debt relief and financial health.
Conquer your consumer debt
Consumer debt isn’t necessary.
Even though it’s easy to buy into the belief that you need something, what you really need is to critically review how that purchase (along with the additional debt) helps or hinders your goals.
Luxury items, brand name items, and overspending take you away from financial security. That’s why you should hate consumer debt.
This TEDx talk by Preet Banerjee is a great way to change your perspective on consumerism.
Don’t let your fear drive your consumer behaviour. Even though you might feel overwhelmed by your debt, and feel like you’ll never see the end of it, adding to it won’t help.
If you know your reason for paying down your debt, it can help you to reach your goal and avoid impulse or unnecessary purchases.
Start with setting one long-term goal, like paying off your credit card debt in full by the year’s end. Work towards it every day with patience. Little changes and small victories over your debt really do add up.
Celebrate killing your debt
Reducing and eliminating your debt is a big accomplishment. When you make an impact, pat yourself on the back. Celebrate your successes — just not with more debt!
By curbing your appetite for consumerism, you’ll impact your debt and your overall financial health immediately. If you focus on increasing your debt payments instead of increasing your purchases, your debt will reduce drastically.
Take a few minutes and listen to our first podcast of 2018 — our LITs from across the country provide 5 great tips on how to view your debt differently.