Are You Ready to Be Debt Free?
When going through the debt review process or even just dealing with debt it is a goal of everyone to get out of debt as soon as possible. The dream is to be debt free and never have to deal with this type of stress ever again.
It is interesting then that so many people who go through many years of the debt review process often end up coming back to their Debt Counsellor again to ask for a second debt review. In some cases, this even happens within the same year as the person just finished their first debt review.
It seems that these people were not really ready to be debt free. Are you?
‘so many people who go through many years of the debt review process often end up coming back to their Debt Counsellor again to ask for a second debt review’
After All That Hard Work
The day that you get your official clearance certificate saying that all your debts are paid up and the credit bureaus are wiped clean is a day to be celebrated. It is the culmination of many months, possibly years of hard work.
You may have thought about that day for some time.
The danger is that you may not be realistically thinking about that day. It is like when someone dreams of their wedding day but never thinks about actual married day to day life. You may be dreaming about being debt free but not actually thinking about what you will do once you have no more debt.
The Very Next Day
For many people who finish debt review and find themselves debt free the first thing they want to do after paying off debts for 5 years or more is…get some more debt.
It is amazing that after all that stress and anguish they immediately want to get back into the same situation that drove them into debt review.
Now, there may be some valid reasons to take on some new debt. For example, you may have been driving the same car for many, many years under debt review and it may now be starting to fall apart. It may no longer be that safe for you and your family. Perhaps you have been renting for many years and now want to look to buy your own place. This can be an exciting goal that has motivated you throughout your debt review and is now finally a possibility.
Don’t Abandon the Savings Lifestyle
While under debt review you are asked to change to a cash lifestyle. You are asked to rather save towards expenses than rely on credit all the time. This can be tricky at first but eventually should have become a way of life. This is a good habit that should continue after your debt review ends.
If you have been paying the “average” debt review payment of around R2500 each month and suddenly finish paying off all your debts then you will find that if you save for 2 months you will have R5000 waiting. Save for 4 months and that becomes R10 000
It is amazing how quickly it adds up.
If you were paying even more then you could save towards a massive deposit on something like a car in only a few months. The longer that you can stretch out and wait to make that purchase the bigger the funds on hand will be. This can keep down the amount you need to borrow for such a purchase.
You may even find that you can buy for cash what you thought you needed credit for.
Don’t Just Daydream
It is good to think about what you will do when you are finally out of debt. But it should not be just vague daydreaming. You should have specific goals in mind. You should picture what you will do with your budget every month. Decide now what you will save and what you are saving towards.
Do you deserve a holiday?
Where will you go? How much will travel cost you? Where will you stay? How much will you save each month towards that goal? Will you have to take leave? Be specific and it will help you remain realistic and prepared.
Prepare for the Unexpected
One of the things that probably contributed towards your needing debt review in the first place was an unexpected expense or expenses. Sudden medical bills or a car accident can see you in financial distress overnight.
‘Sudden medical bills or a car accident can see you in financial distress overnight’
When you leave debt review you should keep in mind that this kind of thing can happen again. This time you need to be ready. Plan now for how much you want to have in a savings account to cover such a cost and set aside funds each month when your debt review is over towards this emergency fund.
Get Ready to be Debt Free
If you start to mentally prepare yourself now for the day that you will be totally debt free it will help you stay focused and avoid missing any debt review payments. It will also help you when you leave debt review. Sure, it might be nice to splurge a little that first month after debt review.
Go to a restaurant and party with the family. Gifts for everyone… but then you should have set goals in mind to stay debt free. Make them realistic goals and plan now for how you will budget in the future when you have no more debt. Take some time now to get ready for being debt free.
So, keep on making those monthly debt review payments and soon you will be totally debt free.