The Change Begins Within
It might sound cliché, but nothing in life changes unless you change. Whether you want to improve your debt position or your overall financial situation, the first thing you need to do is to change your attitude towards your finances. Of course, there are tips and tricks that will help you along the way and we will come to them shortly, but the most important criteria for success in this journey will be your own attitude.
Changing your attitude towards finances might be tougher than you think. You might have heard of the famous “marshmallow experiment” devised by Professor Walter Mischel. Children are given a marshmallow and told that they can either eat it right away or wait for a few minutes. If they wait, they get an additional marshmallow. After tracking the progress of the children who participated in the original experiment for several years, Professor Mischel found that those who opted to wait for 2 marshmallows were generally more successful financially, personally and emotionally later in life. Simply put, those who were able to delay the gratification of their desires were more successful than those who opted for instant gratification.
If you apply the logic to real life, we all seem to have turned into a generation of adults seeking instant gratification today. Unlike our parents or grandparents who waited and saved to make any major purchase, most of us nowadays have no qualms in whipping out our credit cards to pay for overpriced items that we often can’t afford and don’t even need. If our attitudes towards finances had to be summed up in a single sentence, it would probably be “Party now, worry later”. Unfortunately this also happens to be the worst possible attitude you can have towards your finances.
Learn to Distinguish Between “Wants” and “Needs”
Ask anybody from your grandmother’s generation, and they will tell you that almost every single thing that we take for granted today used to be a luxury back then. While this is a fortunate thing in many ways, it also means that most of us are now unable to distinguish between “wants” and “needs”. Everybody “needs” a laptop and a car, and existing without a cellphone is completely out of the question. Where exactly do we draw the line then?
As we said, if you want to pay off your mortgage as soon as possible, the first thing you need to change is your attitude towards your finances. By that, we mean that you need to learn to distinguish between what you really need and what you want. Whenever the impulse to buy something strikes, ask yourself if you really need it and whether it will serve some truly productive purpose. Be completely honest with yourself. If the answer is no, then put the money towards a “mortgage fund” instead, which you can then use to make bigger or more frequent repayments on your mortgage.
Sometimes the answer may not really be clear-cut. For instance, is a cellphone a “want” because you already have a landline or is it a “need” because you need to be reachable when you are travelling? While it is not always easy to decide, remember that there is usually a lot of wiggle room even within the choices themselves. You can always look for cheaper options, discounts and/or exchange offers. Simply put, we are not asking you to give up your laptop and cellphone, and start sending notes through pigeons. All we are saying is that you don’t need a 24Karat Gold MacBook Pro to send emails...
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Paying off your home loan should be one of your most important financial planning goals. We have produced this eBook to bring together a collection of ideas and strategies that can help you to achieve this more effectively and sooner.
In this ebook you will discover:
- Turn small savings into big benefits
- Understand what things truly cost
- Create a budget
- Structural Options
- Line of credit
- Offset account
- Cash-based system
- Other tips and tricks