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Eliminate Debt and Increase Wealth by Changing How You Think About Money

Updated on August 6, 2011

We live in a society that values consumption and debt over building wealth. From the time we're children until the day we die, we're bombarded with messages from the media and from our peers that to consume is good. In fact, the more you have, the more people seem to look up to you. Who didn't admire the girl in school with the designer clothes or the guy with the expensive car? Weren't they usually the most popular kids? I used to believe that if I worked hard and had a good job, I too could have all of those things that we admire as a society. I wanted a nice house, a new car, great clothes, and fancy vacations. The funny thing is, once I started working and could actually afford some of these things, I realized that owning things isn't the key to happiness for me. Instead, influenced by books such as "Your Money or Your Life," and "The Millionaire Next Door," I changed my attitude towards money. I'm finally out of debt (except for my mortgage) and am starting to accumulate wealth for the first time in my life. My goal is financial independence. It took me many years to get to this point. I only wish I would have learned all this when I was in my twenties.

The Millionaire Next Door: The Surprising Secrets of America's Wealthy
The Millionaire Next Door: The Surprising Secrets of America's Wealthy

A very surprising description of who is a millionaire in America.


Money is Not for Consumption It's For Freedom

My biggest change in attitude about money was shifting from the belief that I need to earn more and more money to buy all of the things that I thought would make me happy to the belief that money buys freedom. What do I mean by freedom? Well, if you have money saved, you have a bit of freedom from the need to work or from the fear of being told you don't have a job anymore. Think about it, if you're sitting on a nest egg that will support you for a year or two, how concerned would you be about getting laid off? Wouldn't you start to think differently about your job? You might start to think that you'll keep working because you want to not because you need to. That subtle shift in attitude can make a big difference in your attitude towards your work and in your day-to-day happiness.

When I started looking at money as a way to buy freedom, I stopped spending on things I don't need, which leads me to my second attitude shift.

Living Small and Saving Money is Key

I decided that since buying lots of things wasn't making me happy, I should just stop doing it. Instead, saving money became my new path to satisfaction. I knew that if I built up a nest egg, I could earn the freedom I discussed above. But instead of just going for the freedom from worry of layoffs, I'm going for complete financial freedom or the ability to live on one's wealth. This may seem like a lofty goal and I agree that it's daunting. However, I know that if I live small, the amount of wealth I need to accumulate to support myself will be commensurately smaller as well. So living well below my income level has two benefits. I can save more and I need to save less!

Some might think that living small requires too many sacrifices but I disagree. There are so many ways to enjoy life on a small budget. Also, I've already experienced the lack of satisfaction from material possessions. This is just one of the mental shifts you'll need to make to get out of debt and build wealth.  To me, those goals will bring far more satisfaction than buying a new purse.

How Can I Earn Passive Income?

If I'm going to live on earning from savings, I need to earn a decent return. I started to look into investment options that generate steady income and settled on Treasury Bonds and Dividend Stocks. Each of these investment options pays out a check at periodic intervals. What could be better? Until I'm ready to retire, I plan to reinvest these payments. The power of compounding will allow them to grow even faster. However, I also plan to continue adding to these investments. In the past, I didn't think this way. I would put my money in a savings account that pays little to no interest or wonder what the next big growth stock is. Growth stocks are hit or miss though. You never know which one will actually take off.

My new attitudes towards money have already started to make a difference in my life. I don't worry as much about it and I feel more at ease at work.  I know that this isn't a get rich quick system but instead it will require a lifestyle change and patience over time. But that's okay because at least I'm on the right path. Even if it takes me twenty years to reach my goal, it'll be worth it.


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    • stephanieb27 profile image

      stephanieb27 5 years ago from United States

      Great hub! We are debt-free minus our mortgage too! It is such an amazing feeling. I can't wait until the day we are 100% debt-free!

    • poshcoffeeco profile image

      Steve Mitchell 5 years ago from Cambridgeshire

      My dream is financial independence. Ever since I started to make steps towards changing my life I have had set backs and am struggling to focus and be positive I can make this happen. My finances are the worst they have ever been at a time of my life when I should be enjoying the fruits of my labours. Sadly over the last few years I have made some bad decisions resulting in my current situation. Your hub gives me hope that I can take steps to turn things around with some of your principles. Thanks for sharing this article.

    • profile image

      Jurugo 6 years ago

      That is life changing. I plan to try it out and will get back to you. Thanks

    • profile image

      ivo 6 years ago

      i have much the same idea about money as SD dickens, but with one difference.

      yes stocks has the potential to let you earn passively, but realy with a hypothetical 9% yearly interrest it takes more then 10 year for a given amount to double and where do you get 9% without large risks?

      not going to hapen!

      with a larger amount of money a lower rate of interrest might be enough but first you have to get there.

      my way to get there is to TRADE in something i KNOW WELL and re-invest the proffits i make that way to trade even more.

      you can do this fulltime or next to a "normal" job.

      as long as this "something" is something you know well you will make less mistakes and the mistakes you do make will be less costly then investing it in something you do not know.

      basicly what i advice is to start your own business

    • PETER UNDERHILL profile image

      PETER UNDERHILL 6 years ago

      Well written, useful information which I cnsider to be a roadmap to financial freedom and a stress free life. There is any action or inaction that you have covered very well.

    • Guanta profile image

      Guanta 6 years ago from New York City

      Thank you. Very good Hub. I look forward to reading your others Hubs.

    • SD Dickens profile image

      SD Dickens 6 years ago

      Thanks odie_driver...the feedback is appreciated!

    • odie_driver profile image

      odie_driver 6 years ago from Fredericton, New Brunswick, Canada

      Great hub, very useful and well written!