04 April 2011

Money: Debt

I admit it, I despise debt. Some financial advisors say that some kinds of debts are better than others, and that may be true. Regardless of the character of debt, I still hate it. Whether you have credit card debt, a mortgage, or student loans - you are still tied much more firmly to a job you may hate, just so you can make your payments. Becoming debt-free gives you so much more freedom and latitude to explore options previously unavailable to you.

Other authors, bloggers and financial advisors have all said what there is to say about getting out of debt. I recommend any of the following sources for strategies for getting out of debt:

Your Money or Your Life
Dave Ramsey's Financial Makeover
Man vs. Debt
Get Rich Slowly

I follow a combination of the advice from the aforementioned sources. In short:

  • Sell everything that isn't essential. Use the proceeds to pay down your debt.
  • Prioritize your debts; usually by the highest interest rate, but some debts may have other terms that might make them higher priority. 
  • Throw as much money as possible at the priority debt, while maintaining minimum payments to your other debts. When one debt is eliminated, continue this process until they are all paid off.
  • Get a second job. Take odd jobs. Whatever it takes to increase your cash to use toward paying down your debts.
  • Eliminate all your "extras" - no more stops at the cafe, no more meals out, no more movies. Nothing. Nada. Use every cent you can towards paying off your debts.
  • Cut costs in other areas to free up funds to throw at your debts. No one needs cable television - you are paying to be advertised to! Turn off lights, lower the thermostat, dry your clothes on a line or rack, drive less - anything to reduce your expenses and save money.

Some things to keep in mind:

  • Yes, life will suck for awhile. Temporary suckage is far better than a lifetime of enslavement to credit cards, loans, mortgages and personal debts. Like Dave Ramsey says, "Live like no one else, so you can live like no one else."
  • Eliminate temptations and surround yourself with support. Some people aren't going to be happy that you are no longer going out to lunch, going to happy hour, or doing other things that cost money. Stop catalog mailings - you don't need the temptation to whip out the credit card and spend money you don't have!
  • Don't go to the mall and avoid window shopping - envy develops when you are bombarded with things you can't have or afford to buy. 

Good luck! Getting out of debt is hard work, but it absolutely essential if you want a life of financial independence and peace of mind.

Quick note to my readers: I'm going to devote this entire week to discussing money. However, on Wednesday, I'm going to get away from the technical (I think I might be boring you all!) and spend some more time on the issues around money and the Pagan community. While I think these technical items need to be taught and addressed, I want to build a Pagan-specific framework for discussing money and our values around finances.

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