Is it possible to achieve life goals when in debt?

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Is it possible to achieve life goals when in debt

Debts are cruel. If you ignore your debts, you will lose the mental peace. The financial stress can damage your health, personal relationship, and the motivation to enjoy life.

Debts prevent you from achieving many goals in life as well. Many people are failing to achieve important life goals due to the burden of their debts.

As per the study released by the the Urban Institute and Encore Capital Group's Consumer Credit Research Institute, 77 million Americans are in credit card debt; they have a debt in collections.

On the other hand, our nation owes $1.48 trillion in student loan debt.

44 million students are struggling with their student loan debt.

The saddest part is, living cost and education cost is becoming sky-high, but the income is not growing in a satisfactory manner.

A student who took out a student loan to completed the higher studies is unable to find a good salaried job. He has to accept an average salaried job to survive.

The New York Times has reported, "Americans aged 25 to 34 with a four-year college degree have a startling low unemployment rate of just 2.1 percent, compared to 7 percent for those without a degree."

Many students are failing to start living independently due to low wage or no job. They are coming back to their parent's nest.

They are preferring to pay off their student loan debt staying with their parents.

In short, due to the pressure of debts, many people are delaying in achieving some important life goals like starting a family, buying a house, planning vacations, and starting a business.

5 Important life goals that you can attain while paying off debts

Well, you should be positive in your life. Because no one is immune. Problems happen; you shouldn't lose your hope.

It is true that achieving life goals become difficult when you are in debt. Because your main priority should be to get out of the financial trouble first.

But, you can still be able to fulfill some life goals.

How?

Read the article carefully:

1 Start a family while paying off debts

As per the report of Brides.com, due to the huge student loan debt burden, many people are delaying the plan of starting their family.

As per a survey, conducted by The American Student Assistance, 21% of respondents have acknowledged about their late marriage due to the pressure of repaying the student loan debt.

The average wedding cost in our nation is $32,000. When you have debts, the cost of starting a family is difficult but not impossible.

You can still plan your wedding while paying off your student loan debt.

Here's how:

Though the average cost of planning a wedding has been too high in our nation, yet some couples were successful in planning a budget wedding. They spent less than $10,000 on their wedding to start their family. So, you can get married while in debt by planning a frugal wedding.

When you are in debt, you should plan your wedding wisely.

Here’s how:

  • Try to plan a wedding budget and stick to it.
  • Arrange a simple celebration to reduce the unnecessary cost.
  • Invite a few people including family and friends who are close to you.
  • Stay within your means while fixing the menu, dress, wine, and venue.

Remember, you don't need to spend a lot to make the marriage a reality. Don't go overboard on planning the marriage.

By planning a frugal marriage, you can start a family without waiting until you pay off your debts.

2 Buy a house while paying off debt

Ideally, paying off debt before buying a home makes sense. Because, when you are already in debt, the mortgage payments can create an extra financial burden for you.

Unfortunately, some people have to buy a home to start their family. Rent doesn't come cheaper. In addition to this, after completing studies, coming back to the parent’s place doesn't look good.

But, it is also true that homeownership isn't impossible when you are in debt.

According to the National Association of Realtors 2015 report based on the home buyer and seller generational trends study, a large percentage of recent home buyers are all in some form of debts.

Buying a home when in debt depends mainly on what portion of your monthly income goes towards your debt obligations.

Because your debt-to-income ratio plays a significant role for the lenders.

It decides how much you can afford in mortgage payments.

Remember, if your DTI is high (43 and above), most of the lenders will not approve you a home loan.
2 things you should try to become a homeowner while in debt:
  • Reduce your monthly recurring debt payments to lower the DTI.
  • Boost your income as much as possible.
a. Consolidate your debts to reduce your DTI

You can opt for consolidation; it helps to combine your multiple debts into one. It will simplify and lower your monthly debt payments. Reducing the monthly debt payments will help you to lower the DTI. Once your DTI is low, the lender may approve you a home loan with a lower interest rate.

b. Consider a side hustle to boost our income

A part-time job or a side business can help you to boost your income. Go online to get ample of ideas.

3 Secure your retirement days

A large number of people in our nation undergo poverty in their golden days due to lack of savings. Some people have to extend their working life due to no or less savings.

Well, announcing retirement at the right time and enjoying the rest of the life is becoming one of the major life goals these days.

You shouldn’t ignore your financial future today. Many people are even trying to achieve financial independence.

They want to work hard to save enough money so that they can announce early retirement (financial independence).

Achieving financial independence requires hard work, dedication, and planning. If not financial independence, you should at least try to secure your retirement days so that you can take retirement at the right age.

Here’s how you can secure your retirement days:
  • Include retirement savings in your budget so that you can set aside an amount for retirement every month.
  • Open a retirement savings account to save for your retirement.
  • If your employer sponsors a retirement savings plan i.e. 401 (k), then start contributing to it as soon as possible.
  • If you are a businessman, you should consider small-business retirement plans or other popular retirement plans.
  • Save at least 20% of your income in a savings account.
  • Grow an emergency fund to avoid debt in your retirement.
  • Talk to an expert to get advice for retirement savings.

4 Start a business while paying off debt

Starting a business when you have debts can be difficult due to the lack of cash flow. But, carrying a debt shouldn't prevent you from starting a business.

Make sure you reduce the startup expenses to keep the cash flow steady.
Some tips are as follows:
  • Try not to take out a huge business loan
  • Refinance your student loan or sign up for an income-driven repayment plan to reduce your federal student loan payments
  • Don't quit your current job
  • Find out a business partner who is ready to invest in the business
  • Seek help from an advisor
  • Don't borrow more than you need

5 Planning a vacation while paying off debt

Well, spending money on a vacation is not recommend while you are trying to get out of debt.

But, if the debt payoff journey is making you crazy, you can plan a vacation to rejuvenate your spirit; it will help you to stay more focused on your goals.

But, you shouldn't spend a hell lot of money on your vacation. You should plan a budget trip.

See how:

  • Plan a small weekend trip
  • Visit a nearby place to avoid airfare
  • Create a budget for your trip and stick to it
  • Consider cheaper accommodation and transport
  • Avoid using credit cards to pay for your vacation
  • Save money beforehand to pay in cash

Lastly, to chase the important life goals while in debt, you need to work hard and plan properly. You should try to stay within your means while chasing your life goals.

You shouldn't buy a bigger house or plan a luxury vacation by taking out a huge loan with a higher interest rate when you are already in debt.

Once you start planning things within your affordability, you will be able to stay away from further debts. It will help you to easily achieve your long-term life goals like planning for retirement, investing, and planning for cruise trips.

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