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Budgeting Essentials Blog

Helping you master the practical essentials of Budgeting, Cash Flow, Accounting and Debt Relief.
5 minutes reading time (1061 words)

Bills Killing you daily?

Recently, American consumers hit an all-time high of more than $1 trillion in credit card debt! That’s scary! Total debt, including mortgages, auto loans and student loans is also at an all-time high. Debt, while seeming to satisfy an apparent and immediate need, later denies us future financial freedom.  Asking the right questions can help you avoid more debt. Learn more in this week’s blog.

 Thousands of years ago, a wise man wrote, “The borrower is slave to the lender.” (Solomon in Proverbs 22:7) That truth seems more relevant today than ever.  You may be slaving away at a job you hate, just to pay the bills.  Maybe you would like to work at something else, but you can't because you need every penny you make right now.

The problem is that it has become so easy to get credit and go into debt—especially using credit cards. You can hardly walk into a store these days without being offered an immediate discount on your purchase if you apply for their credit card. That’s tempting, almost appearing wise, But Not!. Paying by credit card has become a way of life. And credit card payments have become a fixed entry in our budgets.

You’ve no doubt heard the saying, “Necessity is the mother of invention.” Let’s apply that saying to the matter of debt. Couldn’t we also argue that need or lack is the mother of creativity?

We can often find a way to avoid debt if we’re willing to solve our need in a unique and creative way. For example, many successful bloggers and podcasters started their business on a shoestring. Instead of going out and buying the latest equipment and software, they used what they had to get started and only purchased more expensive “professional” tools when the money was available.  This is smart!

Often times we look at the success of others and assume that we have to own the tools they now use in order to be as successful as they are right now (after years of hard work). So we go into debt. You can’t borrow your way to success.  Thinking you can is dumb.

The same principal applies to our personal lives.  We often think that we “need” certain items.  Some of our “needs” are actually “wants”.  Other needs may be legitimate needs.  But often the solution that we look at to meet our needs are not practical.  It is like going out and buying the most expensive “professional” tools when we should really use what we already have on hand, or something that is less expensive but will get the job done to begin with.

Then, once we show a profit margin on a consistent basis, we can easily purchase the higher quality, more expensive items, provided they increase our income on a relative basis.

Instead of just reaching for the credit card, here are 4 questions you should ask yourself before going into debt:

1. How crucial is this purchase—really? If we’re honest with ourselves, is this item more of a want than a need? Or, what would be the consequences if I postponed this purchase until I could save up for it?

2. Can I find a creative alternative instead of making this purchase? How else can I meet this need?

3. To what extent will incurring this debt hurt my future ability to grow? We’re tempted to think about debt only in terms of whether we can afford the monthly payments. We forget that over the length of the payoff we may be paying for that item many times more than it’s worth.

4. Is my spouse in full agreement with me about this purchase? If we’re married, one of the great things about a marriage is that our spouse is often wired very differently than we are. In this way, we can offer each other a more balanced view when it comes to decision-making. In large purchase decisions, agree that you need to be in harmony with one another about larger purchases. This will not only save you money, but perhaps your marriage as well.

If you’ve gotten yourself into debt—especially credit card debt, decide to free yourself from slavery to your debt as quickly as possible. One of the best ways to eliminate debt rapidly is by using a technique I call a “Debt Payoff Plan”.

Using this approach, you identify funds you can apply to your debt with a budget.  Then use that "debt fund" money to pay off your debt as fast as possible one at a time. Next you take the amount of money you were using to pay off your previous debt and add it to the payment on your next debt. This will accelerate that debt payoff.  Continue this process on every debt you owe.  Start with a small debt first to build success and confidence.

The Debt Payoff Plan is an extremely effective way to pay off debt quickly. While you’re aggressively paying off debt, it’s vital that you refrain from incurring any new debt. Take the credit cards out of your wallet or purse. Then, once you’re debt-free again, either cut up your credit cards or commit to paying them off each month in full.

If you loved this  blog post, get the next one by getting your name on the Debt Relief Journey blog list.  Don't miss out.

Get my Free Personal Debt Reduction Workshop.  This workshop will begin to change the way you think about debt and spending For The Better Life you want now!

You’ll be amazed how free you feel without debt! And just imagine the things you could do if you had no debt!

Anything you tolerate becomes normal to you. When you stop tolerating debt, you increase your ability to function without it.  You can get yourself debt free. It will take you some time, but the end is worth it!- Dan Heiland

Scroll down to the comments and tell me if this post has helped you and how it did!

If you know someone this post will help, please share it with them!  If you aren’t already a subscriber, SIGN UP to receive notification emails and information on promotions we run periodically!  You can also learn more about personal debt reduction by taking my free online “Debt Relief Workshop” by clicking HERE.

God Bless your week!

Copyright

© 2019 Dan Heiland 2019 Kat Heil, LLC

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