Jillian makes $40,000 a year and manages to pay off $35,000 of debt within 2 years. Michael makes $80,000 a year and still owes the same $40,000 in student loans as he did 4 years ago. How does this happen? The answer is simple- Michael has a spending problem. While Jillian primarily makes purchases based on needs, Michael buys anything he wants all the time. Jillian puts a majority of her income toward paying off debt, while Michael ignores his daily compounding interest and continues to attempt and keep up with the Joneses. Why is it that Jillian can make half the amount and yet live debt free? She possesses certain characteristics that Michael does not and is thus able to deny instant self-gratification.
Jillian is clearly goal driven and a self starter, as she continuously focuses on her future and the long term of her life. Jillian is wise as she is able to understand that instant gratification is often times dangerous. Jillian is extremely patient, which allows her to stay on the right track. Jillian is confident and secure in who she is as a person. Jillian is not materialistic; she does not feel the need to keep up with all the world’s trends. Jillian is clearly responsible. Lastly, Jillian understands that a debt free lifestyle requires sacrifice. She is willing to sacrifice constant eating out and weekly movie outings because she understands that these budget cuts are temporary.
Jillian is clearly on the right track, so let’s focus on Michael. The way I see it, Michael has two options- he can either continue the way he is living and end up accruing ridiculous interest that will force him to live paycheck to paycheck for the rest of his life OR he rearrange his priorities and learn to save for a brighter future. While it is difficult to move away from a lavish lifestyle once you’ve experienced it, it is not impossible. If Michael decides to continue living the way he does- he will most likely never be able to truly experience a stress free life. He will eventually realize that he is in too deep and be forced to rethink his finances and possibly have to file for bankruptcy. If he does file for bankruptcy, Michael’s credit history will be ruined for at least 2 years and his financial instability will haunt him for approximately 10 years until his record is completely clean. If Michael decides to marry and create a family, he will most likely spend endless nights arguing about finances and possibly drive away his wife. Even worse- Michael could end up marrying a woman who is just as irresponsible with her finances, which will absolutely force the family to eventually file for bankruptcy. The children will be raised in an angry and stressful environment where they will learn that the way to live is to spend everything on anything. This will continue on for generations until someone decides to break the cycle. And once that someone realizes just how much simpler life is debt free, there is bound to be resentment. If Michael decides to take control of his life and learn how to properly spend and save, he will be able to achieve anything he wishes. They say money can’t buy happiness…That might be true, but money can certainly allow you to do the things that make you happy. Take for example a night out with close friends. If you only have $20 to spend, you will most likely have an average time. However, if you have $1000 to blow on whatever, you will probably order bottle service, get a limo to drive you around, socialize at fancy clubs as VIP guests, and so on. You will absolutely have more fun and worry less with more funds. Thus- save so that you can live without worry.
So, what exactly happens to Michael if he decides to change his lifestyle and focus on paying off debt and saving a majority of his money? There is the good, the bad, and the ugly.
The GOOD– Michael will feel more confident in his ability to control his life as he learns to save money for his future. Michael will be able to afford vacations to beautiful locations such as Paris and Rio de Janeiro. He will begin picking up more educational hobbies, such as reading and writing. Michael will learn the difference between wants and needs and learn how to prioritize. As time goes on- he will be able to slowly start adding fancy activities back into his life.
The BAD– Michael will most likely lose his party friends as he becomes unwilling to go out all the time. This will at first make him feel alone and lame. Michael will have to start over to meet new friends who lead a more modest lifestyle. He will feel weird and not himself at first. Michael will be nervous and afraid because everything will be new and strange.
The UGLY– Michael will realize that many of his friends were not actual friends, which will temporarily break his heart and damage his view of people. This could possibly lead to hatred and discontent.
So what’s the point? If you want to escape debt and live a fulfilling and stress-free life, you have to motivate yourself to change and take the necessary steps to achieving financial freedom. Decide today if you want to change. Make a few short term and long term plans for yourself. Make sure to write these plans down, as this is proven to serve as encouragement and a constant reminder of where you want to be. Confide in someone you trust regarding your plans and ask them to hold you to it. Make it clear to your high-spending friends and family that you are focusing on changing your finances. This way, they will not pressure you to blow all your money. Change your hang out spots and join some sort of a support group to keep you accountable. Lastly, realize that this transformation will not be perfect and you will slip and occasionally over spend. However, it is about how you react that matters. Do not quit simply because it is hard to live modestly. Instead- never cease to remind yourself of where you want to be and focus on the future you always wanted.
If you are struggling with debt and would like to schedule a consultation with Elaine Fridlin, Call Today!
Fridlin & Associates, P.C.
1517 Voorhies Ave, Suite 4
Brooklyn, NY 11235