For many American’s debt seems like a way of life. For over fifty years the relentless message that debt is “normal” and “acceptable” has brainwashed the public to believe that to achieve the American Dream it’s okay to go into debt. Nothing could be further from the truth. These have been tough times for many hard-working Americans who still unfortunately believe they must borrow to live. But let me be clear, you absolutely must live within your means to succeed financially and to insure a good quality of life –there is just no way around it.
Most who have a debt problem falsely believe that something will happen in the future to solve it and all will be well. A common assumption is that income will grow faster than spending, but that is very seldom the case. Even those that end up making more are by then usually well conditioned to just keep spending more, and end up going deeper into debt.
Debt reduction and eventual debt elimination are very achievable goals. My debt elimination plan has three key elements: attitude, action, and persistence. Of course it can feel overwhelming to start a debt reduction plan, but once a plan is in place and early efforts begin to turn out results, momentum and the feeling of success build. Not only will debt be eliminated; the money that is saved will reduce stress, increase enjoyment of daily life and create financial stability. When does debt elimination begin? Today! Start today with these steps:
- Openly admit you have a serious problem, one that you must solve.
- Every member of the household must agree to reduce spending until your family has solved this problem for good.
- Immediately stop all borrowing! Do not borrow any more money for any reason other than for a true emergency, such as a job loss or large unexpected medical bills. Not one penny, not for any reason. The minute you stop taking on new debt you are absolutely on your way.
- Cut up every credit card and every department store charge card. No exceptions! Use only a debit Visa or MasterCard tied to your checking account for your non-cash purchases. For your cash purchases, take a pre-set amount of money from the bank every week or every two weeks.
- Make no new purchases of significance until your debt is eliminated.
- Write down every single expenditure, every day for thirty days. It only takes two or three minutes a day and the results can be quite amazing. Well before the month is up, your mistakes, problems, and most importantly, the solutions, should start becoming clear.
- Buy and read Money Smart. You will learn a lot that will help you, especially when it comes to the Rules of Money, the Rules of Spending Wisely, and of Investing Successfully. Once you stop breaking the rules of money and start spending wisely you will find that the results can be nothing short of amazing.
- Have a written Spending and Saving Plan that you follow and update monthly. Money Smart walks you through this process step by step with advice along the way.
- If you’re still not making enough progress, go back to writing down every single expenditure, every day and stop using your debit card. Make cash envelopes for each spending category on your spending and saving plan and start doing all your spending in cash.
- Understand that you almost certainly make enough money. The only true exceptions to this are things like loss of your job, being hit with huge medical bills, or having a large family depending on you, and you are the only breadwinner. If your income is not enough to cover your lifestyle, adjust your lifestyle.
- If you need to repair your credit and feel you cannot work things out on your own, contact the National Foundation for Credit Counseling (NFCC) at www.nfcc.org. The charges involved will be very modest and fair and they will work with you regardless of the level of debt involved.
Getting out of debt is a very achievable goal. Over a million people do it every year, and this is the moment to add your name to the list. Eliminating a sizeable amount of debt takes time and discipline but whatever temporary sacrifices you make will be well worth it for a better tomorrow.