A lot has been said across personal finance books and blogs about the danger of debt and how the elimination of debt can speed you on your way to “financial freedom.” While debt is certainly a hurdle which could prevent you from maximizing your earning potential I don’t think it is THE reason you aren’t where you want to be financially.
The mere presence of debt is not the reason you aren’t reaching your financial potential. You have made choices in life which have determined where you are today. Those choices may have been to travel constantly on borrowed money which resulted in a large amount of revolving credit debt. The debt is not the reason but the result. The choices we make everyday affect our financial future. Getting ahead and on track requires a change in the way you think about your spending and how you interact with money.
Just waking up one day and deciding you are going to pay off your debt and start saving isn’t going to get you to financial freedom. It is certainly a step in the right direction, but it is only a step and not a solution. There is a reason you have so much debt, some you can’t control like medical bills others are entirely your doing like cars and credit cards. The key to improving our finances is to identify the underlying reasons for what is keeping us back and then altering our behavior and mentalities.
I have seen many people question the need for budgeting and several bloggers who talk about budgeting who don’t do it themselves. In the progression towards mastering your finances budgeting has a role to play but doesn’t have to be permanent. Budgeting forces you to analyze your spending so you can track your progress in each of your budgeted categories. This is the real benefit of budgeting. By forcing you to analyze your spending you will start to realize what habits are costing you the most. This will allow you to start to change how you think about those categories so you affect a change in the way you spend.
I am a firm believer that you can’t figure out where you are going with out knowing where you have been. Budgeting and tracking your spending let you figure out where you were. Once you have figured out where you were determine where you want to be. If you don’t know where you are going you can’t develop a plan to get there. Setting goals for the future doesn’t necessarily have to mean you are 100% debt free it may be part of the means to get there but isn’t a necessity. Don’t assume that you have to be debt free to achieve your goals. I understand the reasoning behind being debt free and I hope that one day I can say I have the option to be either debt free or not. Don’t let the dream of being debt free keep you from achieving the things in life you want to accomplish. It could be one of your goals, but it doesn’t have to be. Debt doesn’t have to be bad, if you don’t abuse it you can use it.