3 injured after man with knife enters Montreal-area mosque
Three men were injured after trying to subdue a man armed with a knife during afternoon prayers at a Montreal-area mosque Friday afternoon.
Have you ever felt like you’re stuck in a rat race? Like no matter how much you do or how hard you work, you’ll never be completely free from financial obligations. Just as quickly as money comes into your account, it goes out to bills, living expenses, and debt payments.
Adopting a debt-free lifestyle could be your way out. While a debt-free lifestyle often requires sacrifices, the payoff is that you’ll be able to stop living paycheque to paycheque.
Below, I’ll outline some of the enormous benefits of changing your mindset towards money and adopting a new debt-free lifestyle.
A couple hundred years ago, the idea of a debt-free lifestyle wasn’t radical. It was the norm.
Sure, people may have borrowed a bit of money from a bank or a family member to take care of necessities, but these were usually short-term loans that were quickly paid off.
Lending money was a lot riskier, as it was far easier for said borrower to simply run off and never pay. Loans were typically only given to established community members or those from wealthy families with property that could be used as collateral.
Thanks to the internet and today’s modern interconnected society, though, almost anybody can borrow money or apply for a line of credit.
Canadian consumer debt was reported to be over $2.4 trillion near the end of 2023, according to a report by Equifax.
Consumer debt can include:
Statistics Canada recently reported that the average household in Canada owed $1.79 for every $1 of disposable income they had, indicating an increased reliance on debt to cover living expenses.
Some argue that it’s impossible to live completely debt-free in today’s society, especially with how expensive everything is these days.
To say it can be achieved with nothing less than a drastic re-evaluation of your spending habits would be dishonest. But it can be done, if you're willing to sit down, go through your spending habits with an honest and non-judgmental eye, and commit to making changes.
The reality is that many people live over budget. Do you really need a $1,000 iPhone? You can make phone calls and send texts with a $100 budget smartphone from Walmart. Do you need to spend $20 a day on your credit card to buy coffee and breakfast on your way to work? You could make coffee at home and eat a simple breakfast before you leave.
The question is, are you willing to make sacrifices on your end so that you don’t spend more than what you earn?
Even if you don’t choose to live completely debt-free, reducing your debt and learning to manage your spending habits can benefit you in many ways, including:
I would be willing to bet that almost everybody reading this post has, at one time or another, felt stress in regards to money. This stress is typically caused by the feeling that you don’t have enough money to cover expenses and bills. You’re afraid of what will happen to your credit score if you miss a credit card payment or fall behind on your auto loan.
When you live debt-free, you’ll have fewer financial obligations to worry about, which means that you won’t spend as much time stressing about how you’ll pay your bills on time.
A recent Angus Reid survey revealed that most renters and homeowners wouldn't be able to handle a sudden $1,000 expense due to a lack of a financial cushion or emergency savings.
By adopting a debt-free lifestyle, you’ll have less money flowing out and will be able to save and invest more, allowing you greater financial security and providing you with a better cushion when life throws the unexpected at you.
How many people do you know who hate their jobs but stay in it for the money, which allows them to keep driving a nice car, to keep buying expensive things, and to keep going out to restaurants all the time?
Now how many of those people who came to mind would be far happier in another line of work that might pay less, but would be far more fulfilling? They’re just not willing to sacrifice the extra money (and purchasing power) that comes with the higher-paying job.
One of the quickest ways to improve your credit score is to reduce your debt-to-income ratio. As you pay off your credit cards, personal loans, auto loans, and retail debt, your credit report and score will both improve.
The better your credit score, the less you’ll need to worry about borrowing money for the important things in life, such as buying a house or applying for a small business loan.
Many relationships are absolutely destroyed by stressful money situations. Financial hardship can break a great relationship, as both parties struggle to keep up and may blame each other for their circumstances.
By adopting a more conservative approach to finances and spending less, you and your significant other will be better prepared to weather financial storms when they come.
Perhaps the most underrated benefit of living debt-free is the way it changes your perception of value.
One of the biggest contributors to “bad debt” is our consumer mindset. If something breaks, we just replace it instead of trying to fix it. Because of this, we don’t care as much about what we have and are more likely to waste things.
Sustainability and living debt-free often go hand in hand. Those who aren’t as eager to get into debt by replacing everything are more likely to value and care for what they do have, whether that means taking better care of their electronics or only buying groceries that they’ll eat before expiration.
The transition to a debt-free lifestyle usually isn’t something that happens overnight, unless you win the lottery. For most, it’s a slow transition that starts with prioritizing your debts and paying them off as quickly as possible. This is done in correlation with adopting more responsible spending habits and reducing consumer purchases.
Not sure where to start? Keep reading to see some of the best tips to get out of debt quicker.
Christopher Liew is a CFA Charterholder and former financial advisor. He writes personal finance tips for thousands of daily Canadian readers on his Wealth Awesome website.
Do you have a question, tip or story idea about personal finance? Please email us at dotcom@bellmedia.ca.
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