Get Out Of Debt and BE FREE of the Debt Monster

Hello,

And welcome to my hub. I've been in debt for so long I can't even remember what it's like not to have any. I've been through a lot, and I'm fortunate in never having had to declare bankruptcy. I've made more than my share of mistakes along the way, and now that I'm on the road to putting the debt monster behind me, I thought I would share some resources that can help anyone else do the same.

Rule #1 in getting up and out is to recognize there's a problem, and that it's not "The Man". Or the government, or the mortgage company, or anyone other than yourself. But before you just start beating yourself up for the mistakes of the past, it might be more practical to hold a funeral for what must now be your FORMER behaviors. It's time to realize that keeping up with the Joneses isn't the road to success or happiness. It's time to realize that you don't need to spend on that candy bar at the checkout. It's time to put your fiscal house in order, and it starts with a change of mindset. No more late night snacks, because you're going to stop buying snack foods, like soda (aka pop in the MidWest), candy bars, potato chips, and pretty much most items you could consider dessert. You probably need to ditch all the magazine subscriptions because the vast majority of them aren't worth the money. You need to start applying a "needs vs. wants" criteria to ALL purchases, and stop making exceptions. The most important thing you can do each time a buying opportunity comes along is to decide if it's a necessity - meaning that if you don't buy it or something like it, you will eventually die. Of course, this isn't easy, and corporate America doesn't really want you to succeed. The IRS punishes success with taxes, and the food industry tries very hard to insure you have as many impulse buying opportunities as possible.

However, despite the obstacles, this can be done. You just need to decide that you deserve to win, and you'll have to decide that sacrificing those impulse purchases is better than being in debt up to your eyeballs. Sometimes, it takes a Dr. Phil moment - so if you need a good slap upside the head, then rev up your imagination, and consider yourself having received a virtual slap from me !!!

Rule # 2 - Make a budget, and stick to it. This means you need to track every single dollar of your income, so you should get your hands on financial software so you can enter all those expenses and start seeing where your money is going. I happen to prefer Quicken. Be sure to create an account to track the expenses you incur in cash - call it Petty Cash - and start saving the receipts for EVERYTHING. Enter every last one for 90 days, and you may be surprised at how much you spend on things that ultimately, you just don't need. Then it's time to start allocating the newly saved funds to retiring debt, starting with the debt that has the highest interest rate. However, if you happen to have a block of cash hanging around that would entirely retire a debt with a sizable payment, it may make a lot more sense to just get rid of that debt and THEN start using the freed up income to work on other debts.

Rule # 3 - Once you start down this road, it's a commitment. DO NOT GO BACK. There aren't any "get out of debt free" cards on the Monopoly board of life, with the possible exception of winning the lottery. Remember, though, that all too many lottery winners end up broke all over again because they don't change the problem behaviors. Even millions of dollars can't solve a behavior problem if one is too lazy to change. That kind of money can make it awfully easy to do nothing for a while. Remember - debt is your enemy. Never give in, never give up, and eventually YOU will be the master of your financial domain.

P.S. (added on 3/9/08) Your credit score and FICO scores improve as you pay off debt, so if you're working toward being able to buy a home, be aware that the higher your credit and/or FICO scores, the better the interest rate the banks will be able to offer.

Dr. Debt