This is probably another one of those ideologies I have and could probably do a lot more to try and live up to myself, but it’s worth sharing just in case someone is actually in a position to make it happen. What I’m going on about here is how the best way to approach your personal finances is with the mind-frame of someone who is trying to build up some wealth for themselves.
Unfortunately getting into debt is one of those lessons in life and in personal finance which one seemingly has to learn the hard way. You in a sense have to experience what it’s like to be in debt in order for you to be diligent in your decision to try and avoid it.
But yeah, take it from someone who has had more than a small taste of what life is like on the other side of debt (the side where you are swimming in it) – by all means, if you can avoid getting into debt in the first place, do exactly that.
The next best thing if you can’t avoid getting into debt is to work at reducing it. Anyway, it’s not like you have a choice really, but it’s important to put into place some actively managed financial decisions to reduce your debt. Wealthy people use credit and this is totally different to being in debt.
There are some specific debt-reduction steps you’ll have to implement, such as perhaps working to pay off your installments by adding a little bit extra each time you make the payment (you’ll reduce the time taken to pay it back), but these will naturally depend on your unique situation. Everybody has some unique elements of their personal and financial lives which they can use to reduce the debt they have.
Reducing unnecessary spending
One of the more universal ways of working towards reducing your debt is cutting down on unnecessary spending so that the extra money you now have at your disposal can be redirected to paying off your debt. It’s important to make it your mission to be debt-free if it’s wealth you’re chasing.
Increasing passive income streams
You can only work so many hours per day and one full-time job is typically more than enough to take absolutely everything out of you. This is a good thing to be aware of because it pretty much gives you the next step you need to take on your path to wealth creation, that being the need to create income passively and aim for as many passive income streams as possible.
Living a cash-positive lifestyle
Wealthy people enjoy the luxury of being able to spend money on anything they need and want without that spending compromising their core net worth base. This is achieved through living a cash-positive lifestyle, which is basically just structuring your income and expenditure in such a way that at the end of the month you’ve made more money than you’ve spent, or at the very least your expenditure matched what you’ve earned, all of this without touching your core value base of course.