The US debt will exceed the annual GDP next year. “A $1,000 emergency would push many Americans into debt.” It’s sad but true.
Now, I’m not saying that any kind of debt is bad, but as a general rule of thumb, if you took a loan to consume something and pay for it in the future, that’s bad debt.
I’ll explain: If you decide to purchase a new flat TV, an iPhone, or a boat, that’s consumer debt, and it’s bad. These items depreciate over time. It’s not only that you are paying interest on the loan, you are also loosing on how much that item is worth. So, when you sell it, you’ll get a lot less.
However, being a digital nomad can be a solution for people who want to avoid debt.
1. Reduce the cost of living — When you are talking about a vacation, indeed, traveling can be expensive. Stay in a 5-star hotel can be costly. But if you move to a new country to live in, you don’t go to a hotel. You can find a more affordable place, like an apartment in Thailand for 200–300 USD or an apartment in Bulgaria for ~150 EUR a month. Whatever you choose, that’s an excellent way to reduce your money burn rate.
2. Flexibility of expenses — The same goes for all your expenses. Arrived in a place where the costs were higher than you expected? No problem, move to a new place, and adjust.
After taking care of your money burn rate, now you can think of building a plan of execution to grow your money and wealth in the long term. Build a plan that supports your desired lifestyle and responsible finances. Then, once you have it and stick to it, you shouldn’t go into debt again.
Becoming a digital nomad and getting control over your expense does not need to be a life decision, it can be something that you do for temporarily or even periodically; 6 months in your home country and 6 months in a cheaper country.
This doesn’t mean it’s easy to make this change. However, opening your mind to new kinds of living, can make a difference in your bottom line of expenses and get you back on track of your finances.
So, think clearly what are your next steps, how can you tackle your debt, and make sure you are out of it as soon as possible.
It will show you the right roadmap to feeling financially stable.