Overcoming Personal Debt: Are You Sure You Can Afford To Save So Much?
“For every dollar you spend, you get a Frequent Flyer
mile.” Wow! We could get a free trip just by putting our
furniture on our credit card. Spend $25,000, get 25,000
free miles and have enough for a FREE round-trip ticket.
Buying that airline ticket might cost $300-500, depending
on where we travel. But if we use the free ticket to
travel, how much did that FREE ticket really cost?
Let’s say you have a balance of $25,000 on a credit card
and you STOP using it today. If your interest rate is
14.99%, an average percentage, and you pay the minimum
payment of $329 every month, it will take you 20 years to
pay off the balance. You will have paid $78,960 on that
$25,000 balance. They made $54,960 just in interest, not
counting additional fees such as annual fees.
That free ticket cost you $54,960.
That might be a little exaggerated, but it shows how
powerful debt creation is. A Federal Reserve study showed
that 43% of US families spend more than they earn. How can
you spend more than you earn unless you are using plastic
to fill in the gap?
The credit card industry collected 43 billion dollars in
late-payment, over-limit, and balance-transfer fees in
2004. The average family has 13 credit, debit and store
cards. Where are you and your family in this picture?
The other day I was getting my nails done by the Asian
owner of the nail boutique. We were chatting about her life
here in America and I asked if she was able to travel back
to her country to visit her family. She responded, “I can’t
afford to go. I live the American way now.” Confused, I
asked what she meant by that comment. She laughed and said,
“You know, we are so far in debt that we don’t have extra
money for vacations.”
What is the solution to stop this spiraling out-of-control
credit card spending and personal credit card debt?
The first step is to stop using your credit cards for
purchases and use your debit card. The great thing about
debit cards is that if the money isn’t in your bank, the
card will not be approved. You are not buying on future
money.
Next, depending on your philosophy, you have a choice to
make about how you want to eliminate debt. My husband’s
belief is that we should “cut the fat!” No spending, cut
back, and buy everything at the Dollar Store. This will
work. However, it is certainly poverty and lack thinking,
and how much fun is that?
My belief is that it is a good idea watch more carefully
where we spend money. At the same time, let’s concentrate
on making more money. When we increase our income, we can
use that money to pay off our personal debt. There is
abundance in the Universe and if I make more money, I can
enjoy paying off my debt and shopping at Nordstroms!
In the Law of Attraction, what ever we focus on will grow.
If we focus on debt, we will get more of it. If our
attention is on making more money, that will grow. My
advice is to focus on making more money, pay as you go, and
enjoy the journey to a debt-free life.
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Marilyn Schwader and Linda Schwader are successful
entrepreneurs with a passion for helping people remove
their daily struggle for money so that they can focus on
the change they want to be in the world. To receive a
15-minute consultation on building your own home based
business, visit http://www.manifestprosperitynow.com
Tags: Debt Management, lowering debt, lowering personal debt, overcoming debt, personal debt