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Why Debt is a Cancer And How To Start Killing It

Debt is a cancer. It can drag you down into a pit of despair with no hope of ever seeing the light of day. But it doesn't have to be like that.

Two years ago I was easily $15,000 in debt. Credit cards, a car loan and my school loan had me living paycheck to paycheck without a thought that I could ever eliminate the debt.
 
Aside from a home mortgage, which I'm taking steps to refinance and pay off quicker, I have zero debt. Zero. $0. Nothing, zip, zilch nada, and let me tell you, it sure is nice.
 
You can breath easier, save money quicker, and do almost anything you want to do. Of course this is a lifestyle change and you have to want to change.
 
For many people, it'll take hitting rock bottom before waking up and striving for a better way of life. We've been taught that credit cards are a way of life, that you'll *always* have a car payment.
 
Complete B.S., of course, but if you've never been taught any different, how do you know? One good thing about the recent recession is that it's been a wake-up call, a clarion to many of us to kill off that debt and live within our means.
 
So how do you do this? How do you change your life to one of financial success?
 
Obviously, you've got to want it. Focus and hard work are required, but it's well worth it. 
 
After all, the alternative is being in debt your entire life. What if you work your whole life and, upon reaching retirement age, find that your Social Security payment isn't enough to live on. By that time, the cost of living has gone up and inflation has skyrocketed - but the Social Security payments never went up with them.
 
Picture being 70 years old and having to keep working because you never had extra money to put away for retirement.
 
This is why debt is a cancer. It never allows you to live the life you want. It must be cut out and attacked like the cancer it is.
 
I'll focus more on how to do this in later articles, but for now wanted to focus on why debt is so bad ... as well as how great it is to be free of it.
 
To turn this around and leave you with some positives: 2010 has been my first debt-free year and I've already managed a great deal of savings. I still scrimp and save and rarely go to restaurants to accomplish this, but the point is that I have a  savings fund, a paid-for car, a budget and a healthy outlook. I've been able to afford a few things I feel are essential, like a rifle for sick animals that come around our house fairly often (and for self-defense as well). 
 
I have plans to hit a certain amount of savings by the end of 2010 and then will focus on some mutual funds and retirement accounts (a Roth IRA), perhaps even fund a Health Savings Account (HSA). (This is all the more funny because a year ago I couldn't have told you what an IRA or HSA was.)
 
I'm thinking about doing things I really want to, like maybe get a camper or vacation to see friends and family around the country. I can afford to do this now - without having to charge it to a credit card.
 
Not trying to brag here, just to make a point that you can have this if you decide to roll up your sleeves and get out of debt. Anything you want is before you if decide to work for it. And it's really not all that hard!
 
So, do you want it?

 

Wed May 12, 2010

Five Small Steps Towards Financial Success

Submitted by jonahan on May 3, 2010 - 3:54pm.
Tagged:

I've recently gotten out of debt (with the exception of the home mortgage) and have begun to build a bit of savings. I've learned a lot and changed my lifestyle pretty drastically and figured it was time to pay it forward a bit.

 
Basically, I followed the Dave Ramsey plan but sprinkled in my own tweaks that I picked up from many other sources and people. (Dave Ramsey's Financial Peace University is a great place to start - Dave also has a nationally-syndicated AM Radio show along with a free podcast.)
 
Here are a few tips that will hopefully help you on the path to monetary freedom and success:
  1. (Very Important)  Your first step towards wealth is to start a $1000 emergency fund. This should be cash or in very easily accessible account. The idea is that you will always have a safety net and will eliminate most of the worry and stress from your life. With this $1000, something that may have been a big event for you like an unexpected car repair or traffic ticket or something becomes a minor issue. You've heard of Murphy's Law, right? Anything that can go wrong will go wrong? Well, this rule is your Murphy-repellant.
  2. When buying anything other than food or essentials over $10, do not buy it today. Impulse buying is one of our greatest problems when it comes to blowing money. Give it a night, sleep on it, and if you decide you truly do need that item or service, then go ahead. Always ask yourself, "Do I NEED this?".
  3. Avoid restaurants like the plague. I don't think I need to explain this much as we all know how quickly money can go here. Do reward yourself from time-to-time with a dinner out, perhaps to celebrate milestones like paying off a credit card. (But please don't put the bill on a credit card!)
  4. On that note, DO NOT USE CREDIT CARDS! The idea that you'll pay it off soon enough is bogus. Too many times, something will come up, or you'll rationalize not paying the bill now. Pay with cash because you see and feel the money and it's harder to part with. With a credit card, it's easy to think money doesn't exist, it's all a virtual thing.
  5. Save your dollar bills. This one sounds weird but it worked for me. I heard a guy explain it to me this way: he and his wife wouldn't use dollar bills, because that was for all the little stuff you buy. A pop here, a candy bar or coffee there really adds up. So every time they went to buy something, they'd break a $5, $10 or $20. It hurts just a bit more to physically see your cash go, so they found themselves not usually wanting to buy those little things. They'd put the dollars back in a fund for something like a little weekend getaway. Alternately, I'd suggest putting dollars back for an extra auto or credit card payment.
That's it for now, I might do more on this if anyone has interest in it. If you want more now, check out Dave Ramsey's baby steps.

 

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