By Flea - Be A Survivor
I have said many times before that debt is the evil that hangs like and albatross around the necks of many hard working Americans. The key to freedom is financial freedom as well; you cannot have the former without the latter unless you consider indentured servitude freedom.
Debt has grown and grown in this country and has reached a tipping point, people extending themselves, buying more than they can afford because damn it, they have “THE RIGHT“ to that iPod and cable TV. People actually believe that somewhere in the Constitution there is a clause that guarantees cable, telephone and Internet access.
Living beyond your means is a mistake and one that can quickly spiral out of control. Living within your means is a skill because we are brainwashed from a very young age to be good little consumers. Spending our money for the good of the hive (hive=economy), capitalism at its best. Don’t get me wrong I am no socialist or communist, capitalism is where it is at…we have just perfected selling people shit they don’t need.
You don’t need to throw money away on trinkets to support a capitalist economy but I must digress before I stray too far off topic, back to financial freedom.
I have always been good with money, I am not a spendthrift and I don’t fancy fast cars and the latest electronic gear. I do spend money on things I need and sometimes even want…geez I am human, I do “want” things occasionally.
I am lucky enough to be married to a woman who is a mirror image of me financially in female form of course. Together we have managed to do some pretty amazing things with our money mostly because we are on the “same page”. We just paid off her vehicle and are working on paying mine off. We wanted a pop up camper, we saved and paid cash for it, we want a small boat and we are scraping money together so maybe next year we can go get one and pay cash!
Other than our mortgage we don’t have any debt, none, zip, zero, nada. We have one credit card that we pay off every month. How did we do it?
Let me give you an example because that will clear it right up. Say you have 3 bills:
Car - $10,000 your payment is $300 a month
Credit card - $15,000 minimum payment is $45 per month
Student loan – $5,000 payment is $125 a month
I would pick the one with the lowest balance and attack that first. In the above example it is the student loan, if our payment was $125 I would find a way to pay extra on it and pay the minimum on the other two. Say I paid $175 or $50 extra, once I pay that student loan off I now take the extra $175 I have by paying the bill off and add that to the payment of the next debt.
In this example that would be the car, you paid the student loan off and have an "extra" $175, add that to the car payment and send them $475 a month instead of $300.
Once the car is paid off take the "extra" $475 you have and add that to the last debt. Instead of sending your credit card $45 you now send $520 ($45+$475).
You will be amazed how fast debts get paid doing this. How quickly you pay things off depends on how much “extra” you can afford to start with and if you have the discipline to avoid adding NEW debt. Avoiding new debt is key, if you can’t pay cash for it don’t buy it. You may have to sacrifice or even get a second job to try and come up with extra cash but continuing status quo will surely get you nowhere.
One book I recommend highly is Debt-Proof Living: The Complete Guide to Living Financially Freeby Mary Hunt. My wife and I BOTH read it a few years back and she covers debt snowballing in great depth. She offers A LOT of good advice on breaking free of the chains of debt. It is a quick and easy read and can change your whole outlook on your finances.
...that is all.
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