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Abstract:
How to become debt free is an introductory excerpt from Become Debt Free One Paycheck at a Time, a no-nonsence strategy for becoming debt free. It helps answer the question, "Help, how do I become debt free."
INSPIRATIONAL QUOTE
"
Remind me each day that the race is not always to the swift;
that there is more to life than increasing its speed.
Let me look upward into the towering oak and know that it grew great and strong because it grew slowly and well."
- Orin L. Crain
As a child growing up, who taught you about money? Who explained to you how to write a check to pay for a purchase or a bill? Was the money advice you received sound information? If you are like most people in North America, the extent of your personal money management knowledge came from your parents; how they saved it, spent it, gambled it, or wasted it, is where you learned your money management skills. As an adult, creditors and other financial institutions dictate to you when bills are due and the terms of the loans. Choices you have made, and will make in the future, determine the success or failure of your financial destiny. Regardless of where you learned your money management habits, it is time for you to break free from the past and create the life you want, by becoming debt free. If you are living in debt paycheck after paycheck, let me help you reevaluate your fundamental understanding of money. One Paycheck at a Time will give you the tools needed to take charge of your financial life. It will redirect your course of action on your terms.
Debt is a fact of American life.
Jumbo mortgages, home equity loans, and credit cards have facilitated the largest buildup of personal debt in recent history. The following statistics from CardWeb are alarming (1):
The average household has 6.0 bank credit cards, 8.3 retail credit cards, 2.4 debit cards for a total of 16.7 cards.
The average[credit card] interest rate is 14.71%.
There are about 40,000 different credit card products available in the USA. Some issuers have thousands of offers ranging from classic cards to business cards to co-branded cards to affinity cards.
About 80% of teens ages 18-20 have credit cards; Teens spend about $150 billion each year.
About 20% of all credit cards are "maxed out" by their owners.
The current average of unsecured debt is about $8400 per household with at least one credit card.
In 1992 average credit lines were approximately $1800, today they average about $3500.
There were roughly five billion offers mailed last year to approximately 200 million individuals in the USA. This means the average person received about one offer every other week. The average household received more than one per week.
About 81% of U.S. households have at least one credit card.
According to the Federal Reserve statistics, “…consumer debt has more than doubled in the past 10 years. It hit a record of more than $2 trillion in May 2004, not including mortgages and other loans secured by real estate.”
1.3 million cardholders declared bankruptcy last year.
The average household spends approximately $1000 per year in interest that is approximately $83.33 per month.
Although you may try, you cannot ignore the debt crisis you are facing. You can hope that by ignoring your bills it will someday make your debt disappear. CEO Inc reports the following glaring statistics (2):
- 70% of households are living paycheck to paycheck (Source: Wall Street Journal).
- Less than 30% use a written monthly budget to manage household finances.
- 95% argue about money related topics on a regular basis.
- The average American spends $1.22 for every dollar they earn. (Myvesta.org, Inc).
My experience was pretty close to most of the listed statistics above. At one point I had over 18 credit cards all that were at their maximum limit. This shock came after filing for a divorce to a gambling addict. To my horror, I discovered I was facing $50,000 of cash advances that were used to feed his addiction. The judge split the debt between us and I wound up $25,000 in debt at the age of 22. How is it, I wondered, that my husband could make me an authorized signer, without my knowledge, and make me responsible for his debt? Unfortunately, even though I didn't know most of these credit cards existed; I was still responsible for paying this horrid debt back because I was an "authorized signer" on the cards. Despite my best attempts at fighting this, I wound up $25,000 in debt! I vowed at that moment never to make such foolish financial choices again. According a Consumer Price Index Calculator, courtesy of the Federal Reserve Bank of Minneapolis, (minneapolisfed.org/research/data/us/calc/), $25,000 in 1990 is equivalent to $ 39307.57 in 2007. Even though I accumulated more debt by returning to school along the way, I'm now and forever more completely debt free. It took nearly 10 years to get out of debt and I'm so happy that the nightmare is behind me.
One Paycheck at a Time is not an autobiography of how I reached debt-free status; rather, it's a systematic approach to help you get out of whatever debt YOU are facing while making ends meet. I often receive emails that ask "Help! How do I become debt free!?" If I managed to pull myself out of over $25,000 in debt, you can do it too. Your financial destiny is in your hands. You must take personal responsibility for your wealth; if you refuse, by consequence, you will end up taking personal responsibility for being forever broke and in financial trouble.
This compilation of debt-free recommendations comes from dozens of books I've read on the subject and features only the principles, tricks, and tools I know work. Having been there, I know that the guidance offered will help you avoid the pitfalls that could make you fail and accelerate the process of ending the vicious cycle of debt. If you are facing $5,000 of debt or more, or have recently filed bankruptcy, be prepared for a complete lifestyle change. It's not an easy road, and I won't make any promises or quick-fix guarantees. Concepts like discipline, smart choices, and hard work aren't glamorous, but that is what's required.
Had I known these techniques years ago, I would have saved myself so much time and money, not to mention worry. If you are committed to relieving your financial burden, One Paycheck at a Time will be your path to a better relationship with money. I will consider myself successful if, with this program, I help people free themselves of financial chaos, by encouraging them to do the research needed to turn their financial situation around. Resources are available but it's a matter of committing yourself to personal persistence. This book is the first step to getting the "debt-weight" off your back and taking charge of your financial future.
Excerpt from "Become Debt Free, One Paycheck at a Time" Budget your money online for free!
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