Debt clouds your thinking, at least it did mine, and debt can make you do dumb things. The good news is that you can learn to overcome your debt addled thought processes and free yourself from a lifetime of slavery.
It’s really simple to get out of debt but it isn’t easy. The lure to dine out, drive a new car, buy a bigger home, or replenish your tired wardrobe is very powerful. The problem is that the only way many people are able to conquer those urges is by not having enough money to make their payments! Only then do they recognize their problem, clear their heads, and begin formulating a plan to eliminate their burden of debt. That’s how it worked for me.
Today, the only debt I have is a mortgage. My home’s loan to value ratio is around 65 percent (meaning my mortgage is only 65% of the value of my home), and I’m constantly vigilant to insure my wife, my children, and I never go into any type of consumer debt ever again. How did I do it? Try reading How I Paid Off Over $120,000 In Debt In Only 52 Months. That will give you an idea of how I got the ball rolling, but the main way I’ve been able to eliminate my debt (credit cards, medical, consumer, student loans, car loans, etc) was by putting everything possible toward getting it paid off. In full. One hundred percent.
Yes, it feels good to be debt free.
But not every move I made during those years was smart. I did a lot of dumb things as well.
Dumb things I did while I was in debt
1. I kept digging. I continued to apply for more credit. Rather than stop digging the hole I was in deeper, I just kept on digging. I was a debt addict and I had a very difficult time giving it up.
2. Who needs a budget? You need a budget! I never bothered to set up and live according to a well defined spending plan. Nah, I just kept it all in my head. A budget was for nerds.
3. I never made progress. I only paid the minimum on every credit account. For some credit cards I be I never paid more than one cent per month in principle.
4. I didn’t think ahead. I allowed my health insurance to lapse, causing even more debt when my wife required emergency gall bladder surgery. Try reading My Health Insurance Nightmare.
5.I had a payment mentality. I constantly thought about how to make the payments rather than how to get rid of my debt. The payment ruled the day.
6. I grew desperate. I accepted jobs and moved my family just to make more money so I could make those payments.Try reading My Worst Decision Ever.
7. I played the real estate game. I used a home equity loan to “fix” my problem with debt … and only got into more debt.
8. I only lived in the here and now. I failed to establish and fund an emergency fund … even a tiny one.
9. I robbed Peter to pay Paul. I got cash advances on my Visa in order to pay my MasterCard.
10. I saved nothing. I spent everything I made and more … much more. My savings account was bone dry.
Smart things I did while in debt
- I never ran from creditors. I was honest and upfront about my financial situation and how much I could afford to send them.
- I always sent the amount I promised when I promised to send it.
- I never declared bankruptcy of any type.
- I sought help from a non-profit credit counseling service that did not charge me any money and negotiated my interest rates to ZERO.
- I never gave up or blamed anyone or anything but myself for my circumstances.
- Once I began to realize my situation, I genuinely began to work to make extra money to put toward my debt.
Debt is only a symptom
Consumer debt is only an indication of a much larger problem. That problem could be discontentment, ignorance, jealousy, poor money management, impatience, selfishness or pride. At one time or another, each of these described me but the realities of debt slapped me upside the head and my thinking cleared. Since then, consumer debt has become a memory.
What about you?
What has your relationship been with debt? What lessons have you learned?