We have all heard them, been warned against uttering them by our parents but the the draw and allure makes the utterance irresistible.
Today, for my blog post, I have decided to throw caution to the wind and utter the most vile, villainous, dirty four letter word I know.
DEBT!
There, I said it. DEBT and your ability to carry it is a marker of success right? You can walk into your bank and get a loan for a new car.
You can get that credit card that you were sent an offer for or borrow money to get your self a cocker of a new boat!!! Life is good!
You are successful....You arent keeping up with the Jones' you ARE the Jones'.
Your ability to carry DEBT tells you so. Your ability to carry debt is known as good credit....a thing we have been foolishly lead to believe is a good thing.
Its not. Credit is that dirty four letter word spelled D-E-B-T.
To set you on the right track to rid yourself of DEBT I have a few tips. Cut up your credit cards. Yes, they do come in handy in an emergency.
But the money you spend on the monthly payment could be set aside FOR that emergency, and if a little extra cash is something you cant come
up with or a rainy day is something you cant save for, you cant afford that emergency or rainy day at 18% interest either!
Do not cancel your card.Call the company and attempt to work a better deal for yourself, ask for a better interest rate....its worth a shot, but STOP USING THE CARD!Making the minimum payment on your card ensures that you will stay in debt for the near future. Cut it up, pay it down and pay it off.
At the same time start a savings account.This is a must! Even if the money is kept in a mason jar in your back yard. Pay yourself religiously just like you pay your other bills.
If all you can afford is ten dollars a week ($40 dollars a month) pay it. If you can reasonably afford twenty a week($80 dollars a month) pay it.
No matter the amount a penny saved is a penny not spent paying off something you couldnt afford to begin with. Look at this way. If all you can pay yourself a week is ten dollars over the course of a year you have socked away $10x52weeks=$520. if you borrowed that $520 dollars on a credit card at 18% interest you would be paying back an additional $93 dollars. At ten dollars a week over the course of a year, that would put you nine weeks in the hole for the coming year.This is not good money management.
Your savings should start now. Do not make this savings easy to acccess. Get it in your mind that its a hands off account.
Personal loans, Car, and Mortgage DEBT. Loan payment amounts are split between interest and actual principal. You can make your payment
every month but can you afford a little more?? A good way to get yourself out of DEBT is to include an extra $10, $20, $30, or whatever amount you can manage-in addition to your payment- with a specific instruction to your lender to apply it towards the principal. It may not sound like a lot of money, but the lower your actual principal, the less interest you will pay over the course of your loan. More money in your pocket is a good thing! If you are in good standing with your lender call them and see if refinancing to a lower interest rate is something you can achieve. If you are paying a $600 dollar mortgage payment at 7% interest with no problem- a reduction of that interest rate to 5% would free up some additional money that you can specifically apply to principal.
The most important thing to remember is the specific instruction to "apply towards principal" written clearly on the memo portion of your check or statement. You do not want the bank or lender to automatically take a portion of this payment and apply it to interest....collecting that interest is the banks goal- not yours....so be specific.
Lastly and most importantly is to stop aquiring new debt. Just dont do it. Being debt free and independent should be a long term goal, once reached, you want to stay there!!!!!! Live within your means. Being a prepper this concept of self reliance should not be a hard one to get your mind around. Having the ability to self regulate your spending habits is a goal we all should work on. Besides, the less debt you carry, the better able you will be to add to your survival supplies. In an EOTWAWKI(end of the world as we know it) scenario your saved money can add to your supply of tangible items...beans butter and bulllets....which in the end- will mean more than that shiney new car your neighbors are drooling over.
You can replace the dirty four letter words of DEBT and POOR with RICH- and thats one four letter word that doesnt leave a bad taste in your mouth!
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Woohoo - i can't believe that this only your second post and already you are using swear words - bahahaha! Excellent advice to be found in this post Maine Patriot - thanks for sharing!
ReplyDelete(oh and i loved your sentence - "You can replace the dirty four letter words of DEBT and POOR with RICH- and thats one four letter word that doesnt leave a bad taste in your mouth!" - THAT was great!)
Fantastic post and we all need to be mindful of our conditioned spending habits!
ReplyDeleteKeep on writing!
Great post and welcome to the Network.
ReplyDeleteI am proud to say we are debt free. My DH and I both grew up in a different "mindset" than most people. We both come from families that believed if you want something - you save for it. We have, on occasion, gone into "short-term" debt. Which means, for example, we bought my van from my brother a few years ago. We gave him half down and he let us pay out the rest in monthly installments for 5 months. Family and all ya know!
I have been using the Neil Bortz savings method for over a year now. What that entails is to not spend your one dollar bills. Every time you spend money, you use anything but your one dollar bills. If something costs ya say $2.50 you put back the ones (I go farther- I also save my change) thats 2 bucks you put back for savings. We recently came across a deal on a truck to pull our RV with. It was time to break out the "savings account" and it came to a little over $1,200.00 after 13 months of saving. Not bad huh? It might not work for everyone but it sure works for us.
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SciFiChick, thats a good strategy! DH saves all of our change and we use it to pay our property taxes. Funny you dont miss it but its there when you need it and it adds up fast!
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