Debt – What, Why, and How to Get Free

You and I both know the truth: our society is obsessed with “stuff”. The signals we get bombarded with daily try to convince us that we can’t be happy, successful or fulfilled unless we have all the cars, gadgets, clothes, vacations, lobster and other “bling” that we think we want. To fund this lifestyle, many of us are spending more money than we make- and turning to credit cards, loans, lines of credit and even friends and family to borrow our way our of our problems. The truth is, we are digging a deeper and deeper hole.

It’s Time to Get Real

The most important thing for you to know is that your entire financial future depends on your ability to live on less than you make, eliminate your current debt, and avoid going back into debt. Everything else you learn on this financial education journey will be pointless if you continue to dig your debt hole. Having debt reduces your flexibility, stability and freedom. It makes you into a slave to your debt payments. You’re drowning and you can’t even see it because your big screen TV is in the way. Get real right now about getting debt free!

The Key to Being Debt Free

If there’s one thing that most experts agree on, the biggest factor in how much wealth you accumulate over your lifetime and how financially successful you are, is how drastically you can cut your spending below your income. Live on less than you make. Sounds easy but often it’s not.

The biggest hurdle is to get a real feel for where you money is going. Start by looking at your last 4-6 months of bank statements and credit card bills. What are your real expenses and what are your ‘fun’ purchases. You’ll probably notice that things like eating out, shoes, that morning coffee and bagel, or impulse buys are nickel and dimeing you to the poor house. You need to get your money organized with a financial plan. Yes, the dreaded B-word: Budget. A budget doesn’t mean you have no fun money. It just means you have a plan for how much money goes to expenses and how much you can play with each month. It means being in control of your money. Take charge! Budgeting is discussed further in another article.

Drop That Debt Now

Once you have a financial plan, you will be able to see how much money you have coming in each month and what is going out. What your fixed expenses are and where your wiggle room is. In that wiggle room you need to carve out a bit extra to start attacking your debts. And, cut up those cards- don’t add more debt to your pile, it’s time to get rid of it.

In another article I briefly summarize the get out of debt plan introduced by financial radio host Dave Ramsey. I also provide a link to his website where you can find tons more information and products to help you eliminate debt.

Your Biggest Hurdle

The main thing standing in your way is you. And I mean this in the bluntest way possible. Your attitude, outlook, and determination are what will really make the difference. Not the size of your debt or the size of your income. Are you motivated enough to stop eating out, stop buying new cars, and stop letting your money slip through your fingers without a plan? Are you determined enough to sell some of your toys, and to look for small ways to save? Do you really want to be debt free? If not, leave this website and go fester in your mess for a while longer. You’re welcome to come back when you’re ready to make a change. I mean it- getting this corner of your financial life in order is the foundation of all the other financial aspects of your live. Live on less than you make. Period.