So many Americans have fallen for one of the greatest lies ever. That in order to be happy and live the “American Dream” you need to drive a brand new car, live in a big house and be so far in debt you cannot imagine ever being able to dig out of it.
And because of this lie, many people are stressed out and living lives they don’t even enjoy. They wake up day after day going to jobs they can’t stand doing work they do not enjoy for people they don’t like. Once upon a time, this was my husband and me.
Like so many other Americans we thought debt was “normal” – it was just how people lived. Over the course of our early years of marriage we had credit card debt, car loans (we once leased a vehicle which is the worst payment option), we’ve had mortgages on two different houses at the same time and we even mortgaged a boat!
Eventually, we realized that all of this spending and living beyond our means wasn’t making us any happier and we were ready for a change. It took a lot of time and hard work, but today I can tell you that we are 100% debt free. How did we do it and how can you? By following these steps below.
This first step is the hardest, but the most important one in order to be successful at becoming debt free. You have to change your mindset. You need a paradigm shift – a new “normal”. Paying on credit is no longer an option for you. Cash is king – not Visa or American Express. It may mean no more dining out or stopping for carry-out on your way home to pick up dinner <gasp!> – you may have to cook!
You will need a budget and in order to get out of debt, you will need to embrace that budget. You will need to think and behave differently than your friends, family, and co-workers. Like Dave Ramsey says, “If you will live like no one else, later you can live like no one else.” The mind is powerful, but once you get it set on the goal at hand and you stay committed you can succeed.
The best way to achieve one big goal (which here we know is to get debt free) is to set smaller, easier reached goals.
When working on paying debt this is best seen with what Dave Ramsey refers to as the debt snowball. Essentially by working the debt snowball, you begin paying off your smaller debts first.
While this may seem counter-intuitive it actually makes great sense. As you begin to pay off those smaller debts you roll over what you were paying on the previous debt into your next debt and so on and so on. You begin to create a “debt snowball” that continues to grow so that it eventually knocks out all of your debt.
This not only works financially but also creates a great sense of accomplishment as you begin to see your debts disappear one-by-one.
Everything we do or don’t do comes down to our priorities.
How important is it to you to get out of debt? What are you willing to sacrifice and sell?
I think the majority of the people who read this post will blame their debt on what they earn vs what they spend. We all spend our resources (time and money) on what is most important. We all find enough time to do the things that mean the most. We all have the same 24 hours per day to spend but those that want to live healthy lives give up sleep to get to the gym before work.
Those who really want to get out of debt are packing lunches and wearing last year’s fashions and even get side jobs to pay off their debt even faster. It all comes down to what is most important. We wanted to be debt free bad enough that we sold our dream home so we could pay cash for a much smaller yet affordable home. Getting debt free was that important to us.
And last you must have focus. You have to keep your eyes on the prize. Remind yourself over and over why you are doing what you are doing. Perhaps its to retire early or perhaps you’ve always wanted to change careers, but you couldn’t afford to take a pay cut with all of the debt you’ve accumulated. Or perhaps you’ve always wanted to stay home with the kids, but with all that debt your family needed two salaries. Find your why: why do I want to get out of debt – and remind yourself and stay focused on the ultimate prize.
Is getting out of debt hard work? Yep. Is it worth it? Absolutely. Living debt free gives you options and a sense of freedom that cannot be experienced any other way. So change your mindset, set your goals, establish your priorities and stay focused so you too can live life debt free!
Interested in learning more?