Before you continue to read this I want you to go and tally up all your minimum payments that you send to various places each month. Like the auto loans, the credit cards, department stores, student loans and any other debt that is not your mortgage (if you have one).
Now each person’s situation is obviously different but below scenario is quite a common one.Credit card A: $10.00 Credit card B: $15.00 Credit card C: $40.00 Dept store card: $35.00 Auto loan/Lease: $425.00 Line of Credit: $150.00 Student loan: $300.00
Each amount in itself isn’t so bad right? I mean, only 10 dollars a month to credit card A, only 35 dollars a month to the department store you opened a card at so you could buy that couch. Plus the average auto loan or lease because who doesn’t have a car payment today? (hint: not the millionaire next door that you have no clue is a millionaire).
So let’s do the scary math next.Credit card A: $10.00 Credit card B: 15.00 Credit card C: $40.00 Dept store card: $35.00 Auto loan/Lease: $425.00 Line of Credit: $150.00 Student loan: $300.00 Total: $975.00
This very average person is sending almost a 1,000 dollars each month to various lenders. I mean, almost a thousand dollars! In a year that is just a hair short of 12,000 dollars.
How often do you say: “I just wish I made more money, even an extra 500 dollars a month would make my life a lot easier.” Hello?? But don’t beat yourself up. You can’t change the past but you can change the future.
Ask yourself how you could change your life if the money went into your savings account instead of to various lenders. Use that as a motivation to get out of debt.
We live in this “I can afford this much per month” mentality by only looking at each individual debt but we don’t tally up the total amount of debt payments that we are sending to a bank or lender each month. When you do you realize how insane that is!
Dave Ramsey always says: “The borrower is slave to the lender.” Not only that but as long as you have debt you are also slave to a job that you may not like or that is not supporting your dream!
You are stuck in this cycle of spinning the wheel. You wake up, go to a job you don’t like, so that you can buy things and live in a house you can’t afford just so that you can keep up with all the other people (that are broke too). As long as you have payments you are slave to a life that keeps you spinning.
How do you stop this insane cycle of spinning? You make the decision that enough is enough.
1. You sit down, make a budget and tell the money where to go instead of wondering where it went.
2. You make some hard decisions and cut all non-essential spending (i.e eating out, going to the movies, fancy haircuts, expensive cable, alcohol, soda etc.) and apply that to your debt instead.
3. You cut your essential spending like groceries, transportation, utilities, medical, living expenses to the bare bone. Especially groceries. They steal money when we don’t pay attention.
4. You start generating more income by selling things you have laying around the house to help pay off the debt and pick up extra jobs.
5. You ask yourself if that newer car is really worth it. If you owe less than what the car is worth and you could buy an older car with the cash you get maybe it’s time to sell the car, get rid of the payment and take the money you used for car payments to help speed up paying off the rest of the debt. Is driving an older car for a few years really that bad if it means you can be debt-free?
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Tell me, what would you do if the “debt payment” money went into your savings account instead?
You know I agree 100% with this. Debt is often one really big “excuse” for not living your dreams. It keeps us trapped. Debt freedom is truly that…freedom.
Thanks for posting this.
Thanks Scott. I figured you would agree 100% on this being a financial coach yourself. With majority of people living paycheck to paycheck deep in debt we certainly have our work cut out for us.
Great post Camilla. I have recently started my own plan to be debt free (cutting up cards, budget, mindful spending, etc..). It so easy to just “apply now” for more “instant money”. Why? Because we are a culture of consumerism, and frugal, practical people make poor consumers, lol. In 5 years I plan to be completely debt free and have a fair savings so I can walk away from it all and just travel full time. Hamster Wheel and Traveling Swede are two of my favorite blogs, I hope to learn a lot from them. Cheers!
Thank you Vaeltaja! I absolutely love that you have a 5 year plan in place to leave it all and go live your life the way you want to. I know you will inspire a lot of people along the way to do the same. I bookmarked your blog and looking forward connecting with you. Best news of the day to hear of someone working on leaving their hamster wheel! And thank you for the kind words about this blog and The Traveling Swede being some of your favorite blogs. That too made my day 🙂
Not much on my blog yet (its barely a month old), but I’m working on it. 🙂 I’m taking a road trip touring southern New Mexico in June, and I’m planning to find some interesting stuff for the blog. The thetravelingswede.com is making me want to detour into the Utah backcountry (and Sweden too!) so much, but that will be another trip someday. I like the keep/sell/donate pile idea. I just keep a trash bag in my hallway and periodically toss older clothes/gear in it. Then when it is full, off to the goodwill drop. Are you living in your van yet?
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You have a great looking blog! Plus we all have to start somewhere and it takes time to get into the habit of blogging. I’m still learning new things every day and tweak as I go along. When I go back and look at my blog in the beginning I just want to go hide, but that’s how we learn and grow. I’m about to go buy my first Osprey backpack so will check out the Farpoint 40. I love New Mexico, only been to parts but a lot of neat places to explore. I haven’t moved into my van yet but working towards that by selling things (big yard sale this weekend) and also preparing to sell my place. Of course, it never goes as fast as I like it too.
Thanks for the encouragement about my blog. I’m in no big hurry to win awards or make millions from it, just for learning and fun right now. I have have that same patience problem, lol. I am really excited for you and look forward to keeping up with your van dwelling adventures.
Shelly Tiffin says
I can’t agree more with this. What I would add is that it’s not just the financial freedom, but the freedom from the thoughts and worry that consume your mind while in debt as well. It’s hard to conceive of a dream for the future when your consumed with the worry of today. Debt really is dumb.
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Yes! This is so important. I wish we as a country had a better system explaining this to our high school and college kids!
Me too! I wish someone would have shown me a better way while in college. The one good thing about the recession is that the younger generation saw what happened to their parents and despite debt now.
SO thankful to have escaped the debt trap so far! It’s tough avoiding wanting to “keep up with the Joneses.” but OH SO WORTH the peace of mind!
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Good for you! And when it’s tempting to give in, remember the “Joneses” are broke and one paycheck away from disaster.
The “Joneses” are broke?? How can this be? They have that wonderful huge house with a pool, and a giant SUV to tow their new boat. Surely it isn’t ALL bought on credit? ;-p
Jennifer Kaufman says
You are so right! Too often I found myself thinking exactly that – “If only we made more each month”. As you start paying down each debt, it IS like you make more 🙂 Here’s to the continuing trend among many circles to tackle the debt head on and stay out of it!
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