I Will Not Die

This site is intended to be an aid in assisting people to attain their personal potentials. It does that by focusing on the many obstacles that prevent them from reaching those potentials easily. Remove the impediments then get going. One of the biggest obstacles many people face is debt. If they rack up enough debt, then while repaying that debt they end up losing a large portion of their income.

1. Be fully rational while addressing debt

What do androids and computer programs have in common? They don’t care. Now while I don’t believe it is advisable or even desirable for you to become an uncaring person, caring too much about your debt will subject you to the pitfalls that can trap humans. We respond emotionally to many things but we respond even more emotionally to emotional things. The more emotion that is involved, the greater the reaction to the emotion. Before long, we tend to start breaking up. Remove all the emotion: debt is an obstacle. It consumes our income that we could use for more pleasurable purchases. The most rational and concise description of debt is this: debt is a thing. However, many people let the emotions of lost income fuel the emotion cycle and before long debt is not “just a thing,” but it becomes something that lets them feel bad all the time. They dread debt and sometimes after paying on it for a long time feel like the day will never come when it is gone. Then that sensation of a never-ending road through hell just makes matters worse. Eliminate all the emotion. Hit the reset button. Debt is just a thing.

2. Set a plan

Once you fully recognize this thing for what it is, just a thing, plan your assault on the thing. You have to have a plan. This thing is just a debt and it must be zero. Of course, everyone can carry a little debt, but if you have mountains of the stuff you need to make it an anthill. Decide how much you are willing to sacrifice so you can pay it off. Many people overwhelmed with debt make minimum payments. When they do this, the vast majority of that minimum payment is interest. Find some ways to pay more if you can. Calculate how long it will take you to pay off your debt. Save this number for later. Also, a lot of people spend a lot of time looking for some magic solution, biding their time, waiting, expecting some raise at work or some golden opportunity to come along that will solve their debt woes. If you are one of them, wake up. There is no magic solution, it’s just something that has to be paid off. Once you have some plan and once you’ve set a budget that involves making some sacrifices so you can get rid of this thing, throw the plan out and proceed to the next step.

3. Greeting debt with a sledge hammer

Number two was a joke. Number two is really just my version of what you often see in printed magazines and in articles on Yahoo! Finance’s front page. Quite honestly, they’re not my style. If you have lots of debt, throw all that junk out and focus on one thing: if you took 5 years to accumulate lots of debt, then take it easy paying it off, you’ll spend at least as much time getting rid of it as you did earning it. If you have enough debt that it’s preventing you from doing other, more useful things with your money, you need do one simple math problem: (number of years from previous step) / (72 - your age).

If you’re 35 and think it will take you 10 years to pay off your debt using a conventional style, 27% of the remainder of your life will be associated with your debt paying. 27% of a life is a career for some people! It’s worse if you’re older and have more debt. Ask yourself if that’s how you want to be remembered. For me, when I looked at it that way, I turned into a zombie from 28 Days Later. Yeah, it was scary. In an instant, my budget became exclusively rent, electricity, water, sewer, groceries, debt. And fifty bucks here and there for some play. No eating out, no toys, nothing. That’s when more than 50% of my income became available for debt service. Then I concentrated all my efforts on making more money at work and managed to increase my pay by 77% in about a year. All that extra went to debt too.

Have debt stories of your own? I’d love to hear about them!

Dereck :: Jun.12.2008 :: Money :: No Comments »

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