Debt Dunk

Have you ever played the what if game? When it comes to opportunity cost of debt, we all play the what ifs. For those of you who are not familiar with the term opportunity cost, it is a term in economics that refers to the what you give up in order to do something else. For example, if you only had $20 and you wanted a pizza and you wanted a new video game, you have to make a choice. By choosing the pizza, you cannot buy the video. The video game is your opportunity cost.

When you go into debt, you have an opportunity cost, you give up everything else you could have done with all those payments. That dinner you charged on that credit card, that 90 days same as cash computer you bought four years ago, all the other stuff that is long gone or worthless all cost you a cash filled future. This is what you need to think of every time you go to spend money. Do I really need that new gadget or could I do better by paying extra to become debt free.

I am not against fun and new gadgets. However, if you have tons of debt, can you really afford it? If you behind on bills, you definitely can not afford it! The new gadget is your opportunity cost of having all that debt. Just think, if you did not have all those payments, you could save that money to buy your new gadget.

The old you would just pull out the credit card and say charge. This is not or should not be the new you. Gadgets are fun but they are more fun when you pay cash and can afford to pay cash. Do not fall for the instant gratification of obtaining everything right now because your future debt free living will be the opportunity cost of that debt. Just imagine what you can do when you owe no one. Your money will be free to enjoy.

I for one want to get to he point where I have money to give a little, spend a little, and save a lot. This will mean I will not be paying back money to other people and start paying myself. I hope you are all on the same road to debt free living and if you need advice or help, feel free to contact me.

We have all heard the saying “Keeping Up With The Joneses.” It means try to keep up with other people as far as material goods and social status. We all know these people, they always want to pick up the check at dinner, they drive fancy cars, have all the latest toys, and seem to have a huge social status. Don’t we all want to be like then?

Well let me tell you what they and others will not. All the toys and lavish lifestyle is just one job layout off or big medical bill away from all coming to a crash. You see people like this live a wonderful life on a borrowed dime. They float through life looking rich while paying on credit cards, home equity loans, and those dreaded car payments or worse yet car leases.

These people live way above their paycheck just to make an impression on the world. At night they fight over money, stress over paying the bills, and toss and turn all night. Is it worth it?

You can be like everyone else and enjoy life right now to the fullest! However, what happens when you lose your job? What happens if that fancy car breaks down. What happens if you credit limit maxes out? You can only borrow and live off credit so long before the roof caves and you are sunk. This should not be a normal life and you should not accept it as so.

If you buy a new television on a credit card and of course you get the best because you do not have to pay anything out, do you know how much that will cost? If you buy a $1200 on credit card at 11% interest (Really good rate right now) for four years, you will have to pay $288.70 in interest. Any idea what the value of that TV will be in four years. If you are lucky, $150.

That is just one example and normal people like the Jones are buying everything on credit and making small payments each month. If they charge just a $100 a month for dinners out they are paying the same $288.70 interest for a meal that is gone in less than an hour. I have been there done that and paid the price for it. This is STUPID!

Meals taste better, cars drive better, and clothes fit better when you pay cash. You do not have to worry how you are going to pay for it because you already paid for it! This is the way most of grandparents and great grandparents lived. If it was good enough for them, why is it not good enough for us? To truly be free, you have to free yourself of debt. Proverbs 22:7 says “Just as the rich rule the poor, so the borrower is servant to the lender.” This was written many years ago and it still applies. Slavery is alive and well except we put ourselves in chains.

Next time you see your neighbors car and wish your paid for car was that nice, laugh at them because they will be paying for that for at least 4 years while you are investing to build wealth. I guarantee, that car will not look that great when it is paid off but your bank account will look great.

Do not strive for normal, do not try to keep up with the Joneses, that is the bridge to poordom and you are looking for the plane to RICHDOM.

Good luck in your path to Debt Free Living and as always, I am here to help if you need advice or help.

I have written before about Dave Ramsey and the fact that I like his program. Though I am not a huge religious person, Dave’s debt plan is solid and helps people to rid themselves of debt. I have always followed the same principles and I just needed a little reminder of being a good money manager. I have been watching Dave for a while now and my wife and I have become hitting our debt with all we can.

Since I love to learn and any new knowledge can help, we signed up for Dave Ramsey’s Financial Peace University at one of the local churches. We had our first of thirteen classes last Thursday. The program cost $100-$129 for the kit and you become a lifetime member. As a member, you can take the course as much as you want for free. It also includes access to a member only website with some of Dave’s budgeting tools and forms. You also get to meet, interact and both encourage and be encouraged by others wanting to get out of debt.

The classes consist of about an hour of watching DVDs featuring Dave Ramsey. The program is centered around his seven baby steps. Once you watch the video, there is a class discussion and homework is assigned which is geared toward getting your money in order so you know where you are and where you are going financially.

Karen and i found this class interesting and it was great to interact with others from various backgrounds. Since we have applied the basic core of Dave Ramsey and starting really budgeting in September 2007, we have paid almost $11,000 towards our debt.

All of Ramsey’s program is good old fashion common sense but it is nice to have some reminders of these things. I highly recommend this course to anyone who wants to get control of their money and become debt free. I do not believe in bull when it comes to getting out of debt. I am dedicated to provided sound information to my readers and not some scheme. There are no short cuts and I believe if you owe it, you should pay it.

I will keep you updated on my course and if you have taken the class, please feel free to share your own opinion here on the blog.

I have heard in the past where if you are prudent with your money, you will attract more money. My wife and I have noticed this since we have started to really stick to a budget. Honestly, we have always had the money coming in but now we have a set budget we can put any extra coming in can go toward debt.

We seem to be getting a lot of extra income coming from new sources that we did not have before. This makes us feel wealthier now because before we would have found things to spend it on. Being on a reasonable budget makes it easier to apply any raises and extras to debt instead of extra spending.

This is a great way to live and if you decide to follow a plan like ours, you too will see life looking better. It will look like money is coming to you instead of you seeking money. You will start to be a money magnet. As you pay off your debt, things will start to look better. You may not fit in with your free spending coworkers and friends but someday, you will be free spending with honest cash. It is no longer about keeping up with the broke people who live paycheck to paycheck. This is a new way of living that will take you to a whole new level in life.

You do not have to live as a debtor your whole life to have the things you want. Yes, you may have to skip a few fancy restaurant dinners and a few extra trips to Starbucks; however, you will have a future of anything you want if you get out and stay out of debt. Can you imagine a life where you pay yourself instead paying creditors? Life would be easier with less stress.

This can be done and as you progress, you will see what we have, money will come to you. Be prudent and smart about your finances now! Sit down now and get a budget written out. Make sure every dollar you make is written down along with all expenses. Be honest with what you need and allow a little fun. If you get on a plan and stick to it, you will stop being one of those people waiting for the paycheck to save you and then run out of money way before your next pay.

Start now no matter where you are at or how old you are. When you get done reading this, sit down by yourself if single, with your wife if married, and your whole family if you have kids and write out your budget. If you have questions or need help, I will be happy to guide you with any help I can.

The economy is tough and for a while I have been trying to find a source of increasing my income. My current job is basically per Diem or when needed. I have not had any work for about a month. The good news is, my job just picked up to the point that I will have a descent salary for at least a few months. This brings me to a good point when paying off debt.

I have talked about the two equations of a budget. One is the income side and the other is is the expense side. If expense out weighs the income, you are in trouble and either have to cut expenses or increase income. In a weak economy it is harder but not impossible to increase your income.

The most simplest form of increasing your income is to get a better job with higher pay. This is easy if you have the skills and are in a an area where the job market is booming. I for one am not in that type of area. The next method is to take on an additional job. You could deliver pizza, wait tables, work fast food, or any other job that will boost your income. This is not always desired but you have to look that it is to get rid of your debt so it should only be short term. It will boost your debt paying and get you out of debt faster.

If either changing jobs or getting a better job is not an option, it is time to look at alternative ways to make extra money. With the Internet, it is easier than ever. Many people have found a lot of stuff in their basement, attic, or garage and have made a few thousand dollars selling them on eBay. You could also have a yard sale or find a resale shop that will buy the stuff or sell it on consignment. This is short term income but it could be a quick reduction in your debt.

Once you have done the above, you can look at the various at home ways of earning money. If you have good typing skills, there are doctor offices and medical companies that pay you to do medical related transcripts and billing. If you are a good writer, you could find freelance jobs on the Internet to earn extra income. Some companies people to do customer service work from home. These are just a few suggestions to up your income at home, there are many more. Just be careful not to fall for scams and never pay someone to work for them.

One way my wife and I use to earn extra money was to do mystery shops. Many of these companies reimburse you to eat at nice restaurants and also throw in a few dollars to cover your expenses. Though this is not big cash, it does give you free meals, and products with just a little bit of time. When we lived in a bigger area, we were going out once a week to steak houses and having $40 meals and we got reimbursed for filling out a survey about how the place looked and how the staff performed. It sure did help with the budget. As I advised for the home work stuff, never pay to do these types of shops. If you have pay a fee, it is scam and all you are buying is a list of sites you can find on your own.

The final way I will mention is bartering for things you need. Even though this is not cash, you will get something of value which you would buy otherwise with your income. If someone else has something you need, find something that you can do to get it for free. I have exchanged many things before to get things I need. These could be skill work or physical products. Anything you can get for free that is moral and not against any law is a good thing.

The ways I mention here are just suggestions to get your mind working. Increasing your income is a great way to speed up your debt payoff. However, be aware that it will not help if you continue to use credit cards and just increase your expenses to meet your new income. The main key is to spend less than you make and pay off your debt as soon as you can.

Have a great way that you have increased your income? Please share by leasing a comment to help or inspire others.

How would you like to go through life with fear everyday? Waking up and going to sleep can be scary. This is not so far from reality for many people. They are burdened by their Debt. This type of fear can creep into every part of your life until all things good become bad. Many divorces are caused by debt. Families are devastated by debt. The world does not need debt.

I see a future where men, women, and children live in harmony with their money. To get to that point, we all need to look fear in the face and say you will not conquer me! I am doing it and you can too. The only things you should fear in life is those things you have no control over. Debt is not one of those things. It really is your choice to not go into debt. If you live paycheck to paycheck, debt will find you. If you take control and say enough is enough, debt will run like the coward that it is.

Have you done a budget yet? Have you stopped using your credit cards? Do you have at least a $1000 put away for an emergency? These things are important and tomorrow is not the day to do these things. Gather the whole family around you and start today by making a plan. If you are single, it is all up to you. If you are married call in the managing partner (your spouse) and together set your life on a whole new path. If you have kids, they are never too young to teach them and let them be part of the finances.

I can hear little voices of some of you reading this saying, “but Tom, you just don’t understand, we have no money to pay everything.” My answer to that is, “I have been there at one point or another.” By ignoring your personal finances, you create bigger problems in the future. It is time now to stand up and be an adult and say I can no longer live like this. Citibank is not my friend! Chase does not love me! If you say that, you will start to wonder why you are sleeping, eating, and entertaining with the enemies.

I want you to take an hour sometime the day you read this and review your finances. Then I want you to create a budget and I want you write down everything you make and everything you have in expenses. If your expenses are too high, you have two choices, increase the income or lower the expenses. You should have food, a place to call home, utilities, and a car to get you where you need to be. If you are behind on any of these things, stop everything else until you get caught up. Credit cards and unsecured debt is on the bottom of your expenses. Pay the needs first and then you can tackle the unsecured debt.

I am willing to help for free. If you think you are hopeless and need some help, I am just an email away. Just go to to the contact page and send me an email explaining what advice you need and I will do my best to help. Once you do that, come back and leave a comment to let me know you made the first step. This could be the first step in a whole new life!

The holidays are winding down and the Christmas season is over. Now as the New year emerges, I have a question to my readers. Do you have financial regrets over you holiday spending? Many people spent reasonably for the holidays. Some did so because they are tired of being indebted to the credit moguls. Many more did so because they could not get any more credit or they feared the current economic situation.

Hopefully, you are one of the ones who are sick and tired of owing credit card companies your paycheck. If you over spent and now are overwhelmed, it is time to slap yourself a little, admit to your mistakes, and take the bull by the horn. Make 2009 the year you bust loose from the credit trap that you were lead to believe was the normal way of life. Wake up call! You do not have to live in debt to live. By delaying pleasure now, you can be debt free and live a whole new life where you are in control of your personal finances and not the other way around.

If you are holiday blues because of overspending, I am here to tell you that I have been there and done that. It is time to step up and work like a tornado to pay off those debts and swear off on living beyond your paycheck. Sit down and write out a budget and start paying off debts from smallest to largest. Cut everything out that is not a need and see where you stand. You should spend everything you make on paper. Starbucks is out, home cooking is in. You can do it and I am here to guide you. If you have a question, I am here to help. If you need a little guidance, ask and i will do my best to answer. I am still fighting the debt monster and together, we can send the leaches who feed on society packing.

Happy New Year and may 2009 be the year you take your money back and become the CEO of your personal finances.

Debt free does not mean dishonest. You made the mistakes and it is your job to fix it. If you honestly borrowed the money, you should do everything you can to pay it back. However, there are times that it may not be possible at the moment so you need to prioritize your finances.

The first key is to take care of your basic needs. These include eating, shelter, transportation, and household needs. I am talking about needs! This does not include the top brand steak, cigarettes, and other wants. You should feed you and your family on what you can afford. If you are deep in debt, you can not afford New York Strip and other more luxury items. Once you cover your basic needs, it is then time to tackle your debt.

There are many schools of thought when it comes to debt. The best plan I have found is Dave Ramsey’s Baby Steps. You save up a $1000 for emergencies and then start paying off debt from smallest to largest while paying minimum on the rest. If you do not have enough income left over to pay even minimum, you need to find ways to earn extra money or stop paying.

If your income is too low at the time, I would pay the secured debts first and stop paying the credit cards and other unsecured until you can get your income up or sell something to free up money. You can come back later and settle with the credit card companies. If you can afford, pay everyone now!

You need to have a clearly written budget laying out where all your money is going. Income and expenses should be equal. If you have more expenses than income, sell something, get a second job, or lower your expenses. You need to live with in your income or change something. Many people, including me, realize that you have more money than you think if you write it all down and stick to a budget.

The key is, nobody is going to fix you debt mess for you. You borrowed the money and you went into debt. It was partially the fault of the leeches who feed on society by pushing easy credit. However, you and I made our own debt bed. It is up to you to tackle it with all the energy you can muster in order to clear up and dunk all the debt. Cut up the credit cards, borrow nothing else, and pay off what you owe as quickly as possible. I am in the boat with you and I know it is tough but it can be done.

If you find this post useful, please share it with your friends and book mark it your favorite social bookmarking site. Also leave a comment and join in by sharing your own ideas or asking questions.

This blog is here strictly for one reason. I hate DEBT! It is the biggest misconception placed on society. Did I buy into it? Of course I did. I was raised on the great concept that to get credit, you have to have credit. So at age 18 I was working for Sears and applied and got my first credit card from them.

I went out and purchased a VCR and then a new television. This was great; it was instant gratification at its finest. Buy now pay later. It was the American way right? Who cares that I was paying minimum payments at 24% interest. I had the great entertainment. It only cost me $22 a month. Well I learned that at that rate. I little $1000 I borrowed would only take 111 months. Holy cow! That was almost ten years. That great TV and VCR would be all at age 28. That was a huge wake up call. It was going to cost me $2442 for that TV and VCR. Worst part was, the VCR was refurbished because when I was 18, VCR were almost $1000 new.

I paid off that credit card as fast as I could and would love to tell you that the story of my credit cards ended there. Even with my new found knowledge at 18 of interest rates, I followed the normal society and charged and borrowed. That is what normal people do right. No that is what creditors want you to believe. I learned more and more as I grew older and made tons of stupid mistakes but all that has changed and that leads me to this point.

This blog will hopefully inspire you, kick your butt a little, and educate you in the matters of debt. My mistakes and my education will hopefully save you before you make the mistakes or help you if you are sinking in debt. Feel free to jump in and be part of my journey to wipe out all debt!