The Obvious Secret To Get Out Of Debt

The Obvious Secret To Get Out Of Debt

The Obvious Secret To Get Out Of Debt

In case you have forgotten, or were never taught, there is a little followed rule of living that could very well save your financial life. You won't hear it widely covered on T.V. You certainly won't get any informational letters or emails promoting it's virtue. The internet is more or less oblivious to its teachings. In fact unless you specifically look for it you might not find it at all.

This "Golden Nugget" that can save you from a world of debt woes isn't a secret, but it certainly is a lost art. It was common knowledge for our grandparents' generation and it kept families, cities, states, and countries fiscally sound as long as they followed it's precepts.

Simply put the secret is... "Don't spend more than you make."

I told you it is no secret, but there is no doubt that living within your means is the silver bullet to the destructive transformative effect of debt. The minute you live within your means debt's growth is halted and the opportunity to pay off your debt emerges. Continue to pay on your debt and you will be free of it. Pay more than your minimum amount and you hasten the day that you pay it off.

So if it is so simple and obvious, why do we get into debt in the first place and why do we dig ourselves deeper and deeper each year?

You need to start somewhere

The first thing to know is that the credit card companies are not your friend. Have you ever wondered why post high-school teenagers, who have little to no income, are targeted with low credit limit pre-approved card offers? They want you to get in the habit of charging at a young age. By the time you are established enough to begin looking at buying the bigger things, they have you hooked and will up your credit line to "help" you get those things you really can't afford.

You've gotta have it now

You see... Past generations would look at that major purchase, figured out how long it would take to save up the cash to buy it and then started to putting away that little extra until they had enough. We, however, don't need to wait. We can mortgage our future earnings to get that "thing" that we can't live without. It does seem a little short-sighted to pay possibly the rest of your life for an item you could have paid cash for if you had waited a few more months. But hey... That is the culture.

You never look at your budget (If you have one)

How much do you bring in each month?

How much of that is claimed because of debt?

How much do you have left at the end of the month after essential expenses?

Excessive debt makes you avoid looking at your current income to debt ratio. So when you run out of money before the end of the month, you put even more purchases on the credit card digging yourself deeper and deeper into the debt abyss.

Listen... Some debt is necessary. No one I know can can put cash on the barrel for a home, a college degree, or a new car. But beyond those "necessary evil" loans, the goal of living within your means should be a sacred duty you owe to yourself and your children. If you follow the rule of "Don't spend more than you make", you will find yourself in a much improved financial position at retirement and a less worrisome position today.

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