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?
You sign up to be notified of the release of my upcoming book on how to get out of debt. One of my passions is to share the lessons I learned getting off the financial hamster wheel. With no debt and money going into your Financial Freedom (savings) account you can then choose to live your life differently and leave the rat race hamster wheel behind for good.
Tell me, what would you do if the “debt payment” money went into your savings account instead?