We all know people who make lots of money yet seem to be drowning in debt. Actually, some of us ARE those people!
Then there are also the people who make an extremely modest income, yet have been able to pay off their mortgage or their student loans, or both. We’ve read about them, we’ve heard about them on the news, and maybe some of us are those people as well!
Why does our society feel that going into such debt is “normal”?
First of all, going into debt is a very easy thing to do. If you have an income and a reasonably good credit score, getting a credit card or two (or three or four) is as simple as clicking a button on your computer.
After receiving those cards, many people spend mindlessly, never considering the bottomless pit that can result with overuse.
I have heard many people say that they bought things with their credit cards that they never would have dreamed of buying with their hard-earned cash! Using their credit cards was quick, easy and painless…that is, until they got the bill.
Many, but not all who are overcome with debt are impulse buyers, running to Wal-Mart or Best-Buy for every new gadget as soon as one comes out. They have to have the finest house, the newest car, the Louis Vuitton luggage.
And of course, owning all of this stuff is okay…as long as there is income available to pay for it. Going deeper and deeper into the hole by living beyond our means just for the feeling that instant gratification provides is a true path to self-destruction! (Financially, that is.)
How do we turn it all around?
1. Begin with a plan.
The first step is to have a concrete plan. The first line item of the plan is to stop the unnecessary spending…NOW.
2. Gather all of your data.
In order to make a plan, you must gather all of your information and take stock of the entire amount of debt that you have. List all items lowest to highest, with full balance, interest rate, and minimum payments.
3. Decide which debt you are going to start with.
Experts such as Dave Ramsey advise paying off the lowest debt first, while at the same time paying all other debt accounts with just a minimum payment per month.
When the first low debt is fully paid off, they suggest taking that monthly payment and applying it, along with the minimum payment, to the next lowest debt.
That way, you are still paying out the same total amount each month to your debts. Soon you will have paid off all the lower ones and can begin to focus on the higher ones.
4. Make a plan for every penny of income that you will have.
The next part of the plan is to control every cent that comes through your checking account. Not paying attention to your money is a big mistake.
The best way to do this is to have a budget. Use our BUDGET PLANNER. Sticking to a budget month after month is a proven way to get control of your money.
5. Commit to your budget and eliminate mindless spending.
Stop the unnecessary spending. Be aware that you have a certain amount of money coming in and make sure that it goes where it needs to go first. If there is an excess of income at the end of the month, put it toward that one debt that you have selected to be the one to eliminate first.
It won’t be easy, but you CAN do it.
You have to be willing to make the sacrifices required to reach your goal. It won’t be fun at first, but as you see your debt diminishing, you will have feelings of accomplishment that will spur you on to make more progress.
You can do without the “stuff.” Happiness really isn’t about things. The old saying that “the best things in life are free” is, in fact, a true statement. You know that nobody on their deathbed wished that they had bought a fancier car.
When you finally reach your goal of no debt (and you will!) sit down with your spouse, your significant other, your family, or whoever is in this thing with you, and agree to abolish mindless spending once and for all.
Don’t let yourself get back into the kind of debt that you have just worked your way out of. Have a plan for every dollar that crosses your palm, give money your respect, and do it right this time.
Peace of mind is worth the wait. You deserve it.