Living Debt Free

Most people would think that this is a simple concept. Stop spending money, that is how you avoid debt, but there is more to it. Controlling spending takes a large amount of self control. Sometimes the only way to really curb the "Poor Spending Appetite" is to put things in perspective, and really SHOCK YOURSELF into shape. So here are a few examples to help you curb your spending:

1) Imagine, if you will, that you are a strapping young 21 year old college student. You want to treat yourself for your birthday so you decide to go away with your friends for a ski trip. At the end of the rather nice vacation, with travel, hotel, food and shopping and you spend a total of $3,000. You put it on your 29.9% (because you had no credit when you got it, and it was the first card you got in college) credit card because you could afford the monthly payment and you had room on your card to do it. The question then becomes, ?when will your debt be paid off and how much will it really cost?? Well, you will be 63 years old and have paid over $13,000 in interest alone before your vacation debt has been paid off. Yes, that is basically your entire adult working life. Sure, it may have been a great trip, but do you want to spend roughly one dollar a day, every day for the next 42 years paying that trip off?

2) Another way to look at things is pretty simple. List everything you have purchased with your credit card. If you bought anything on sale, and what you saved by getting it in the moment of impulse. Then take that purchase price and multiply it by 2.28% that is the average amount more that your purchase will cost you, if you are lucky enough to have an interest rate under 14%.

3) The average American household has $84,454 in personal debt, including mortgages, c ars loans, credit cards, and other personal debt.

4) Over 40% of U.S. families spend more than they earn, and the average minimum payment made to credit card companies is 90% interest and only 10% principle.

5) 1,410,000 individual bankruptcies were filed in the United States in 1998 and 1,490,000 were filed in 2001.

6) To really scare yourself into reality, take a look at the Bureau of Public Debt located here: http://www.publicdebt.treas.gov

Once you realize how damaging uncontrolled spending with credit cards can be, you can take the first true steps to curbing spending. For convenience it we have broken this down to a 5 step process.

Step 1. Remove all your cards from your wallet or purse. No longer travel with them in hand (this will prevent you from purchasing on impulse).

Step 2. Stop accumulating any new debt. (no more unneeded purchases of any kind)

Step 3. Pay off the Debt you have already accumulated. Getting yourself back to Zero will not only be liberating, but will allow you to begin to use your money wisely. For example, imagine if you could take the money that you were paying to your credit card debt, and you were able to invest it instead? Wouldn?t it be better to build a nest egg, than a never-ending hole?

Step 4. Fi nd ways to celebrate successes without spending more money in the process. Curbing unnecessary spending does not mean that you deprive yourself of fun. Simply find alternatives that are financially feasible.

Step 5. Set financial goals. Like any training; physical or financial, setting goals gives you something to work towards, and a sense of accomplishment when reached. This also allows you to reinforce your positive actions with your money. So, set short-term, and long term goals that you wish to achieve.