Shift Your Thinking, Shift Your Debt

Are you stuck in what feels like a never-ending spiral of credit card debt and personal loans? Well, you’re not alone. Many Gen Y have fallen into this trap due to the instant gratification mentality that is so prevalent in our society and, of course, the fact that accessing credit is super easy.

If you’re anything like me, you got a credit card for your first overseas trip at around age 18, and with little financial management education at school, the next thing you knew your credit card was maxed and you started saying ‘yes’ to the offers to increase your credit limit that were coming at you hard and fast.

Commonly what happens next is a multitude of credit cards are rolled into a personal loan, to reduce interest payments and ‘simplify’ all of this debt!

Unfortunately for most people, the credit cards don’t get cancelled and the debt cycle starts again. In my years as a financial adviser I’ve seen this time and again adding up to thousands, tens of thousands and sometimes even hundreds of thousands in debt.

The reality is, the system is against you, so you need to get smart and shift your thinking if you’re going to have any chance of beating it and getting to the point where you start building real wealth for yourself, instead of just wishing to be back at $0 (a dismal goal when you think about it).


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Step 1. Learn the art of delayed gratification.

If you’re going to have any chance in beating your debt, or not accruing debt in the first place, you need to learn to save for what you want.

Start by setting a small goal, something you can achieve in a matter of weeks or months (like maybe a new pair of shoes or item of clothing), work out how much you want to spend and what your savings timeframe is, then divide the total you want to spend by the number of weeks you have to save.

Let’s say $200 in four weeks, that’s $50 a week you need to set aside.

At the end of your savings period, go shopping for the item and enjoy the process. Enjoy the time spent looking for the perfect item and think about the fact that you have saved up for this. You’ll find the feeling quite different (in a good way) and will be far more considered about spending your money.

Step 2. Create a budget.

As boring as it may sound, if you want any chance at building wealth, saving and reducing debt, you need to know where your money is coming and going.

Start by writing down what you get paid every week and then start a list of your expenses. Use a spreadsheet to make it easier if you want.

Then subtract all of your expenses from your income to work out what is left over. This is what you can start using to save and invest towards things or experiences you want, or to reduce debt as quickly as possible.

If you signup for my free weekly money tips at I’ll email you a budget template to help get you started. Getting a handle on what you spend your money on, and what the big picture looks like, is really powerful and necessary if you want to build wealth and live the life that you want.

Step 3. Stop spending and smash that debt.

If you’re really ready to get rid of that debt, it’s time to review your budget and cut out anything at all that you can, applying your surplus money each week directly to your credit card.

Cut up the card too, so that you have no way to keep spending on it. If you have more than one card, work out which one has the highest rate of interest (you may need to call the issuer to find out) and apply the bulk of your surplus to that card, making only the minimum repayments to the other ones.

Once the first one is paid off, apply the same repayment strategy to the card with the next highest interest rate until they are all paid off.

You can also look for low interest or no interest balance transfers as a way to get your cards paid off faster, but be sure to cancel any old cards once the balance has been transferred and double check the annual card fees before making any decisions to balance transfer.

If you’re serious about repaying your debt and getting the life you want, then you need to shift your thinking to long-term wealth creation and delayed gratification. If you want some help doing this, then check out my online financial planner, 8 Week Money Makeover.

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