“Freedom and wealth is an outcome of “Time”; the most precious asset that we all possess. Time however is a variable to each individual as our actions from our choices determine the longevity and returns from this asset. To maximize the return on this asset is determined by the energy that we put forth in developing our financial education, relationships and health.”
In your twenties your future is too far away to think about and what is important is the “here and now”.
Your financial habits are not great, as you will have probably maxed out your credit card, delayed any savings and focused mainly on pleasure spending.
Your twenties are the time to have fun and its ok to make financial mistakes. However, the bad financial habits that you have accumulated in your twenties need to be gone before you head into your thirties.
Being in your thirties is different, you become more responsible and yes a little more serious about life.
Living in a cold damp house where it was party central every weekend doesn’t seem so appealing. The comforts of a warm centrally located apartment with your partner or a flatmate is the place you really want to be. You start to drink wine and your parties go from 100’s to dinner parties of 6! No police get called to your dinner parties!
You will find that children, family, marriage, buying houses are the main topics of discussion amongst your friends.
Shopping. Bills. More bills. Your health. Appointments. Money. Credit cards. Rent. Mortgages. Tax returns. Work. Some of these things were present in your twenties, and if you really wanted to ignore them you could but now you can’t.
If you make the right financial choices in your twenties, many of the thirty something life events become not so stressful and far more pleasurable. The reason why,is because you have a good financial base!
However, if you don’t make the right financial choices in your twenties, your life will be one of financial struggle – not only in your thirties but for ever.
“Money is only a tool. It will take you where you wish, but it will not replace you as the driver” Ayn Rand
By pursing these 10 Financial Goals before you reach 30, you will have set the foundation for you to enjoy financial security and independence for the rest of your life.
1. Know Your Personal Financial Profile
“When it comes to money and so many other things in life, understanding your weaknesses and strengths can help you with your future plans.” Tagene Brown-McBean
I know that this doesn’t look like a financial goal however it is the key to your success in achieving your financial goals. You need to know what your values and beliefs are around money.
What is your risk profile? Does spending money give you pleasure? Have you got good saving habits? When you see something you really want, do you justify to yourself how much you deserve it even though you cant afford it. Do you like credit cards? Are you ever able to pay your credit cards off in full every month?
Do you bury you head in the sand when it comes to dealing with money?
There are lots of financial personality profiles assessments on the internet and many of them are free. Here is a link to a great article on personalities and money. How Your Personality Affects Your Finances
Go and find out what your relationship is like with money. Then decide if you have the commitment, desire and motivation to pursue these financial goals before you turn thirty.
2. Write Down Your Financial Goals.
“By failing to prepare you are planning to fail” Benjamin Franklin
Once you have an understanding of your financial personality, you can then start to plan your financial future.
Write down your financial goals – short, medium and long term goals.
The timeframes you set for these goals need to be aligned to your financial personality.
Use the KISS and SMART metrics to write your goals. (Keep It Simple Smart) and (Specific, Measurable, Action, Realistic, and Time Bound).
This financial goal needs you to be disciplined and focused. If you struggle with these personality traits – thats ok. Find someone who can help you or go on the internet and look for templates that you can use to guide you to writing your goals.
Find out how to write your financial goals that are aligned to you and your current priorities in life.
If you don’t take the time to put a financial plan in place by the time you reach your thirties, you increase your chances of failing to achieve those financial outcomes that will enable you to live your dream life.
3. Stop Impulse Spending
“Remember, buying something is not the problem
Give up your bad habits around spending. The sooner you give up the habit of impulse spending, the better off you will be financially.
Try to understand why this behaviour is important to you as it does not serve you well. This behaviour does not support wealth creation. If you continue to spend impulsively your financial future going into your thirties and beyond, will be a struggle.
Don’t stop enjoying your life and spending money all together. You should be spending money on things that make you feel good. Just be realistic about your spending habits. If your spending is reckless and impulsive, then do something about it.
4. Get an App To Track Your Expenses
“There are plenty of ways to get ahead. The first is so basic I’m almost embarrassed to say it: spend less than you earn” Paul Clitheroe
If you are in your twenties and you have a negative perception or no motivation to budget or track your expenses you need to change right now.
Holding on to these beliefs will hold you back from having any financial security in your thirties and later in life. Keeping a track of of your expenses is one of the key financial habits that will enable you to have financial wealth and independence in your life.
There are some amazing budgeting apps that you can download. Go search for these apps as they enable you to budget and monitor your expenses with ease and no stress.
When you reach thirty it is essential that you are able to live within your means otherwise you will find yourself drowning in debt.
Remember your thirties will bring more expense and cost to your life. Good budgeting habits will ensure you are prepared to manage these extra costs and live within your means.
5. Learn About Investing
“Formal education will make you a living; self-education will make you a fortune”. Jim Rohn
To create long term wealth you need to become educated about investment.
The best time to start getting the basics sorted around investment and start building your wealth is now – as you head into your thirties.
With sound investment planning in your twenties you should have an investment portfolio up and running by the time you are thirty.
Investing in your future now, before you turn thirty, ensures that you will reap the financial rewards of security and independence for the rest of your life.Advertising
6. Learn How To Manage Your Debt
“Debt is like any other trap, easy enough to get into, but hard enough to get out of.” Henry Wheeler Shaw
Don’t borrow money to buy depreciating assets is a key rule to managing debt.
Debt can work in your favour, but only when you use it for things that tend to rise in value over a reasonable period of time.
Using borrowed money to invest in a house, a business or an investment (which includes your education) is the sensible use of debt. However you still have to pay the debt of and if you don have a plan to manage your debt, then interest will compound and your debt will triple.
Borrowing to buy a new phone, pair of shoes, TV, or car is not a smart use of debt.
Get rid of your BAD DEBT – credit cards, higher purchase or car payments. Avoid credit card debt like the plague.
There is a very simple rule to follow when you spending, if you have to borrow money for it, then you simply can’t afford it – that includes using credit cards.
7. Get Insurance And Start Saving For Emergencies
“The habit of savings is itself and education; it fosters every virtue, teaches self denial, cultivates the sense of order, trains to forethought and so broadens the mind” T.T Mauger
In your twenties the concept of an “personal emergency” is never thought about because it just doesn’t happen in your twenties. If an emergency occurs usually your parents will sort it out.
However that it all changes in your thirties and things like Life Insurance, Income Protection Insurance and Mortgage Payments start to appear in your lives.
You need to protect your future. Setting up a fund and getting insurance for you to call on in an emergency is a great financial goal to have underway as you enter into your thirties.
8.Stop Relying On Your Parents For Money
“You cannot help people permanently by doing for them, what they could and should do for themselves.” Abraham Lincoln
If you are still relying on your parents to financially support you when you are thirty, you should be worried.
I get that you may have a student loan and in your twenties your parents were your ATM machine however this is a bad habit to maintain as you go into your thirties.Advertising
It is pretty much guaranteed that if you have bad debt and still rely on a monthly allowance from your parents then your chances of having financial independence and creating wealth in your life will not happen.
That is your reality.
9. Start A Retirement Account
There is no way you would have missed all the hype that has been promoted about how important it is to start saving for your retirement in your twenties.
The book Get A Financial Life by Beth Kobliner focuses on helping people in their twenties and thirties get their personal finances sorted. In her book Beth Kobliner outlines an example to show how the power of time on your investments works.
“Suppose you set aside $1,000 a year from age 25 to age 64 in a retirement account that earns 5% a year (historically, stocks return about 8%, but we’ll be conservative). That’s $39,000 total you invest. By the time you turn 65, you’ll have $126,840. If you don’t get started with saving until you’re 35, you’ll only have $69,760. Starting just ten years earlier would have doubled your total. Yes, doubled.”
When you are investing in your future with the goal to achieving financial freedom, then time is your biggest ally. Start saving and investing now before you reach thirty.
10. Develop A Financial Abundant Mindset
“When we do what we love to do; when we are generous and seek to help others; when we live within our means and save money; when we always seek a more specialized knowledge…we then have an abundant mindset, and are bound to realize financial abundance”.
How you handle your relationship with money in your twenties will influence how you live the rest of your life.
Starting to develop a mindset that supports financial abundance, will help you to prosper in the future both financially and personally.
A person who has a financially abundant mindset is one who has developed knowledge and skills to acquire financial wealth however balances that with philanthropy and generous giving.
Pursing these 10 financial goals before you reach thirty will guarantee you financial security and independence for the rest of your life.
You have the power and the choice as you head into your thirties to create the life you desire.
I hope you choose well.Advertising
‘Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery” Charles Dickens
Last Updated on July 10, 2020
The Definitive Guide to Get out of Debt Fast (and Forever)
Debt can feel crushing, like a weight that is always weighing you down. Looking at those numbers, it can feel as if you’ll never get out from under it. However, if you really want to learn how to get out of debt, it is possible with a great deal of focus and self-control.
Getting out of debt isn’t impossible. Like any big goal, all that it takes is an action plan to identify where you are and creating a plan to zero out your debt.
Table of Contents
Identifying All of Your Debts
The first part of paying off your debt is getting a complete picture of what you owe. When you have everything written out in front of you, it makes it much easier to create an action plan. Depending on how much you owe, it might also help you realize it’s not as bad you might have originally thought.
Here’s how you can get started identifying your debts:
1. Own Your Debt
Before you start identifying all of your debts, take a moment to process that you have debt but want to get out of it.
Forgive yourself for any past mistakes, missed payments, or overspending. It might be painful to accept how much debt you have at first, but you must own it.
2. Make a Debt Tracker
It’s astonishing how few people ever created a tracker to understand their total debts. Most likely, it comes from not wanting to accept the guilt of having debt, but, if avoided, it can make it nearly impossible to get out of debt.
Open up a new Google or Microsoft Excel sheet and list out all of your debts. Start with the name of the creditor, interest rates, total balance, loan term length (if any), and the minimum amount due each payment. This will include student loans, credit cards, and any other type of debt owed.
3. Get Your Debt Number
Once you’ve made your debt tracker and taken the other steps, identify your total payoff number. This is crucial, as you will have a starting point and a clear goal that you are trying to achieve.
Prioritizing Your Debts
All debt is not created equal. It’s imperative to understand that there are different types of debt.
1. Understand Bad and Good Debts
Bad debts are usually paying for things you want instead of always need. While there might be some emergencies that max out your credit cards, often times it’s excessive spending.
There are three main types of bad debt:
- Credit Card Debt: The average American household owes over $16,000 in credit card debt!
- Auto Loan Debt: According to CNBC , the average auto loan in the US is $30,032!
- Consumer Loan Debt: Consumer loan debt isn’t as common as credit card and auto loan debt, but it’s still considered bad as interest rates are usually between 10-28%.
Good debt is identified as investments in your future. Here are three common types of good debt:
- Student Loan Debt
- Mortgage Loan
- Business Loans
2. Decide Which Debt to Pay off First
Once you know each type of debt and their interest rates, you can begin to pay off debt quickly.
Focus on paying off bad debt first, regardless of if it is a credit card or auto loan. Start by paying off the loan with the highest interest rate first.
If you have several credit cards with different interest rates, you want to focus on the one with a higher APR. You will actually save more money by eliminating the card with the highest interest rate.
3. Don’t Pay the Minimum Amount
Paying the minimum amount digs you into a hole as interest rates will offset your payment. Even a small amount more than the minimum can help you pay off debt much faster.
Removing Obstacles to Pay off Debt Quickly
Creating a debt tracker and prioritizing a plan is simple, but avoiding temptation can be difficult.
1. Set a Reminder to Track Your Debt
“If you can’t measure it you can’t manage it.” -Peter Drucker
It’s so important to track your debt to ensure that you get it paid off quickly. Similar to working out and measuring your results, you need to track your debt constantly. Start with a weekly reminder, where you sign on and log your updated number. Did you increase, decrease, or stay the same?
Regularly tracking your student loan balance can be incredibly motivating, as well. You will get a huge confidence boost each time you see your total debt amount decreases.
Set weekly and monthly goals so you can have short term wins and keep the momentum going.
2. Hide Your Credit Cards
If your biggest debt is credit cards, you need to eliminate temptation and remove them from your wallet.
Some people have gone to extreme measures by freezing their credit cards. Why? This would create an ice block around your card, which would require you to chip away at it slowly. This will give you time to think if it’s the best idea to buy that thing you’re about to buy.
3. Automate Everything
Willpower can be a huge downfall to paying off your debt. By automating your bills each month, you will ensure that willpower isn’t involved.
4. Plan Ahead
Getting out of debt will require some sacrifices, but with enough planning, you can make it work.
For example, if you know that you have a friend’s birthday or family dinner coming up, plan ahead for the costs. Whether you need to cut back on spending the week before, pick up a side job, or meet them after dinner, do what is needed.
5. Live Cheaply
The only way to get out of debt is to make some sacrifices on your spending habits. Find ways to save money each month so you can apply that amount to your outstanding debts. Here are some ways to save money each month:
- Live with roommates
- Cook dinners and prepare lunches for work instead of eating out
- Cut cable and choose Netflix or Amazon Prime
- Take public transit or bike to work
Finding the Lowest Interest Rates
The higher your interest rates, the harder (and longer) it will take you to pay off any debt.
If possible, you want to find ways to lower your interest rates to help get out of debt quickly. Here’s how you can get started:
1. Maintain a High Credit Score
Your credit score will have a large impact on your ability to refinance your loans and receive a lower interest rate. If you have a low credit score, it’s unlikely you will be able to refinance your loans. Use these credit tips to increase and maintain an excellent score:
- Never miss a payment
- Don’t exceed 30% of your credit limit
- Don’t sign up for more than one card at once
- Limit hard inquires, like auto-loans and new credit cards
- Monitor frequently with free credit-tracking software
2. Find Balance Transfer Offers
Start by opening a free account on credit.com. Credit.com offers you the chance to open a free account and see what type of balance transfer offers you can receive. Some of your existing credit cards might already have 0% or lower APR balance transfer offers available.
Contact each of your credit card providers to ask about lowering your rate for a one-time balance transfer offer.
If you do take advantage of this option, make sure that you use a balance transfer and not a cash advance. Cash advances have a ton of high interest fees (15-25%, depending on your credit card) and will only compound your debt problem.
How to Get Rid of Debt Forever
Setting up a plan, removing temptations, and getting the lowest interest rates is the first step to get out of debt.
1. Keep Monitoring and Adjusting
Once you have a plan, don’t get comfortable. Track your debt payoff plan and make the necessary adjustments when needed.
Monitor your credit scores with a free site like CreditKarma. The higher your credit score climbs, the more likely you will be to secure a new, lower-interest loan.
2. Earn More Money
There are only so many ways to save money. Instead of clipping another coupon or making sacrifices for your morning coffee, find ways to earn more money!
Think about it…it is much easier to find ways to earn an extra $1,000 per month than find $1,000 to cut from your budget.
Here are some examples of ways to earn more money:
Talk to Your Boss
Have a conversation with your boss about current salary and/or commission rates. If you’re not satisfied or want a change, don’t be afraid to look around at other positions. Some of them might even have a student loan debt reimbursement plan!
Start a Side Hustle
This could be coaching students on the weekends, driving for Uber, or taking paid online surveys. There are tons of ways to make money outside your 9-5. Now that you have a clear plan to pay off your debts, you’ll be more motivated than ever to figure out creative new ways to earn money.
Build an Online Business
There are so many websites and blogs that earn money from ads, affiliates, and other online products. Find your niche and get started.
3. Celebrate Your Wins
As you progress in your debt payoff journey, don’t forget to celebrate your wins. You need to always reward yourself for the hard work and discipline that is required to get out of debt.
While you shouldn’t celebrate so big that it increases debt, make sure to factor in little rewards to keep you motivated.
4. Set New Financial Goals
Eventually, with a plan and these steps, you can rid yourself of your debt. Once you do, make sure to celebrate your monumental achievement, but don’t stop there.
Now, you can focus on acquiring wealth and increasing your net worth. Set new financial goals so you have a new target to aim toward. Here’s how to set financial goals and actually meet them.
These could be anything now that you are debt free! Think about where you want to travel, buying your first home, or saving for your future retirement. Just like before, make sure that your goals are specific, measurable, and achievable.
Congrats, you can now set a plan in motion to finally pay off your debt quickly (and hopefully forever)!
Remember, if you want to get out of debt quickly, it’s not always easy. Just like any big goal, there will be sacrifices, challenges, and problems to overcome.
More Tips on Getting out of Debt
- How to Pay off Debt Fast Using the Stack Method (A Step-By-Step Guide)
- Coming Back From the Debt Trench? 5 Ways to Do So
- 14 Important Steps You Should Take To Free Yourself From Debt
Featured photo credit: Pepi Stojanovski via unsplash.com