Few things in this life hurt as much as crushing debt. When you spend a little time reading and researching you will learn that the most common cause of divorce in America is related to money. Most people are living from paycheck to paycheck and they are only one bad turn away from being homeless. That is no way to live. Debit can also be one of the hardest hurdles to overcome in your prepping journey. And while it might not be feasible to fully retire all debt, it should be your goal to get out from under as much debt as possible.
When it comes to debt there are good forms and bad forms of debt. Bad debt is typically relegated to the credit cards we use. The reason this is bad debt is that the majority of the items we purchase on credit are not needs but wants. In essence we have the ability to live without these items. Unfortunately we buy these items and then are forced to not only pay the full price but interest as well. Always remember this little proverb: the borrower is always in submission to the lender. It is always true.
Prepping is about making sure we have the items we need and the skills we need in order to survive when all else around us fails. We are prepping for the future. We are prepping for disaster. We are prepping because we like the idea of being prepared for anything that the world might throw our way. Unfortunately debt plays a crucial part in the way we can prep. If you are strapped with huge bills and crushing debt then you are not going to be able to prep the way you would like to. So how can these changes? Well the simple truth is that it will take some time, dedication, and some sacrifice on your part. However if you are truly interested in getting away from the debt then these simple tasks could go a long way towards helping you realize your goal.
While it might seem like a foreign idea or even an outdated concept, having a budget is the best way to see what you have coming in and what you are sending out. While the federal government does not adhere to a budget the same cannot be said for you and I. the government has the ability to change the rules and to print more money if they need it. You and I cannot do that. We need to be fiscally responsible. It is time to look at all of your monthly expenses and compare them with your monthly income. If you are sending out more than is coming in then you will not be solvent for long. That is a recipe for disaster and for financial ruin.
- Pay More Than Minimums
Every month when a credit card bill is sent it tells you how much money you owe all together and it then breaks down what the minimum monthly payment would be. This is a very tricky time for most people. We love the idea of keeping our money and we are tempted to spend as little as possible. For many people this type of payment is easiest because it is almost out of sight out of mind. The truth however is much different.
If you make the minimum monthly payment on a credit card balance of three thousand dollars, you will eventually spend more than ten thousands dollars to pay it off. It will take years and thousands of extra dollars. When you pay more than the minimum you are actually paying towards the principle debt. Always strive to pay more than the minimum. It will lower your overall bill and it will pay off the debt much faster.
- Never Rob Peter To Pay Paul
This is an old phrase that is simple. The idea behind this statement is that many people will take money from one area to pay off another area. In most cases this will mean pulling money from an IRA or some other type of retirement account and using that money to pay off another debt. This is almost always a poor idea. Not only will you lose your vested interest in the account but you will be charged a penalty for early withdrawal. You will then be taxed for the money you receive. If at all possible try to pay debt with other means before this is ever considered a viable option.
- One Step At A Time
Debt can be hard to manage. We see the bills mounting and we simply freeze. Instead of freezing why not take an approach that many money managers talk about. Find the debt with the highest interest rate and pay it off first. By paying a little extra on this debt every month you will be able to save money in the long term.
- Credit Card Smash
While having a credit card for emergencies might be an okay principle for some people, it is not always the same for others. If you are having a lot of credit card debt it might be time to consider cutting up the cards. If they are not there then they cannot be used.
Debt does not have to define who you are and it certainly does not have to dictate what you can do and when. We all understand that mortgage debt is a real thing and most people have it. We also understand that most people are going to have automobile debt. While these things might be unavoidable, the other forms of debt are avoidable. Take the time to get on top of your debt issues and you will soon learn that it will lead to a much easier and a much more productive prepping lifestyle.