Debt is out of control in this country. No, I’m not talking about the federal debt or anything like that. I’m referring to the individual debt that everyone seems to have. In addition to certain understandable large ticket items like a house and school loans, and others that are less necessary like car loans, we also tend to have thousands of dollars of credit card debt. I’m not here to guilt trip you though, I’m here to help you get out of this mess.
Why get out of the mess? Because having lots of debt adds unnecessary stress to your life as you worry about making payments, ducking calls from collectors and generally trying to hide the fact that you don’t actually have any money. It doesn’t have to stay that way. Think: “Control debt”.
1st Things 1st - Stop Spending Money
First thing is to stop spending money on things you don’t need. Yes, this includes regular fun things like going out to eat or renting a movie. If you want to get out of debt, it’s going to hurt a bit at first. Just buckle down and get to it. Remember: “Control debt”.
Try to cut wherever you can as well. The mantra that comes from people like Dave Ramsey is “rice and beans, beans and rice.” I’m not saying you have to go that far, but do try to simplify where you can. Plan: “Control debt”.
Then start with the smallest debt and pay it off. Then take the money and roll it into the next bill and so on until they are all gone. Ramsey advocates doing this for all the bills including the school loans and the house. He calls it the “snowball method”. I think that is a good idea but so long as you get rid of the credit card debt you will be doing well. Exercise: “Debt Control”.
One note of caution is that you don’t get caught up too much in the interest rate and tax benefit game. It is true that certain debt is less bad than others and is reimbursed somewhat at tax time. Unfortunately, this gets confusing and many will get discouraged by trying to navigate those waters. Stick to the basics and get rid of the debt. Once that’s done, nothing else matters much. Embolden: “Control Debt”
Ah, but what about life after that? After all, everyone should be looking down the road to retirement and how to ensure you have enough money later in life to remain comfortable. The key here is to not get greedy. Find a highly recommended financial planner and take that money you were spending on your bills and put that into some form of retirement. It won’t be exciting, but it will get the job done and leave you with a solid foundation for later in life. Celebrate: “Debt Mastery”.