For almost all of us, debt is or has been a necessary evil. It usually starts with a small overdraft and ends up with car loans, mortgages and everything in between. In fact, we have been brought up over the last few decades, to be comfortable with a certain amount debt; something that is generationally unique.
So, making the assumption that you wish to be rid of all your debt, what steps do you need to put in place in order to make it happen?
Stop Being Comfortable
At least stop being comfortable with debt. Make it a priority to eliminate your existing debt, and, if it is the case, your reliance on it. Begin by making yourself aware of how much debt you actually have, and be specific. Also, refuse to add anything more to your current debt, especially as you begin to see it reduce.
Do you have credit card debt and a savings account with money in it? If so, you are living in a false reality. Credit card debt is the most expensive debt you will ever have, and the best thing you can do is remove it as soon as possible. If you have savings that are not yielding around 19% interest (they aren't), then the money you have is not effectively allocated. Stop feeling good about having inflated savings, and pay off your credit cards. The same goes for high-interest loans and anything else you could effectively remove with your current financial resources.
Leverage and Invest
The best way to pay off your debt is to get more money. While the statement may seem as useless as it is obvious, you may have opportunities available to you that will allow the creation of cash flow focused investments. The most likely is the latent equity that exists in your home. By leveraging that equity and taking out an investment loan, you can use your growing portfolio to assist in paying down your debt, including your mortgage.
Improve Your Life, Not Your Lifestyle
Your lifestyle doesn't need to change just because your income does. The worst time to make significant purchasing decisions is when you are feeling at your most financially confident. Unfortunately, that is usually when we choose to purchase that new car, a boat, extend the house or buy a holiday home. For example, after a major pay rise, promotion or securing that dream job, we often feel invincible and, for some reason, choose to demonstrate that by spending a lot of money. The psychology of the affluent has been researched for years, and one of the points that has come out of many of these studies, is the hesitation to reactively spend. In other words, many affluent people choose to make decisions when adrenaline and optimism aren't surging through their veins.
It's important to reward yourself, but before you do, you should consider how you will feel about the lifestyle improvement in a few months, or years. By definition, unless you have unlimited resources, you are sacrificing something in order to improve your lifestyle. Are you willing to go without it?