Several weeks ago a young couple visited my office. Their situation wasn’t all that unique.

He’s a teacher and she’s a CPA. Together they take home about $100,000 a year – not too shabby.

They had a little under $10,000 in credit card debt – mostly from their wedding. They also had a $20,000 car loan and $65,000 in student loans. Not the end of the world.

They had about $20,000 they saved since before they were married. I suggested they take $10,000 and get rid of the credit card debt pronto. They agreed to do this.

Up until this point of the story – I liked what I was hearing. After all, they are a young couple with plenty of upside income potential. I wasn’t crazy about the credit card debt they had accumulated but it only came about as a result of the wedding – not a slow creep of living beyond their means on a monthly basis. I wasn’t too concerned.

However, I started to sweat when we went through their monthly expenses.

While they were in deed paying down their debts, they had the option of doing so much faster and weren’t taking advantage of that opportunity.

Instead, they were spending $400 a month on personal trainers and a whopping $1200 a month on dinning out with friends. This $1600 was only the tip of the ice berg. Together we figured they could easily cut a total of $2500 off their monthly spending.

I showed them that once they did that, they’d be completely out of debt (including the student loans) in about 3 years. Then we looked at what their financial life would look like if they continued to save that $2500 a month. The picture looked very rosy.

So why was I sweating it?

Because they didn’t seem all that interested.

They came to me looking for a solution to their debt problems. I showed it to them and they shrugged. I just didn’t get the feeling they were willing to roll up their sleeves and really do the work.

Forgive me, but I think part of it has to do with their youth. They were enjoying life and maybe they figured they could always get out of debt and cut their spending “manyana”.

This was frustrating to me because I know that for many people, “manyana” never comes.

I couldn’t find the right words to get them interested in taking action to get out of debt and on the path to financial freedom.

Was there something I could have said? What would you have said in order to motivate this couple? Is it a case of leading a horse to water and therefore, a lost cause? What’s your take?

Post by Frugal Dad

Photo courtesy of Hey Paul

It is that feeling you get just before your car has crested the top of the roller coaster’s tallest hill. When everything opens up in front of you. When the long, anxiety-filled climb is almost behind you. It’s an exciting time, and oddly enough that euphoric feeling in the pit of your stomach is nearly identical to the one you feel just before sending in your final debt payment.

By the end of November, we will have crested that hill. A hill that has taken us over two years of blood, sweat and tears (well, at least a lot of sweat and tears) to climb. And as the landscape opens up in front of us, our only regret is that we didn’t get on the roller coaster sooner. We wasted nearly a decade when it came to finances. Yes, we accumulated some debt, but we committed no real financial sins. We just didn’t buckle down like we should have.

I’m not going to rehash how we wound up in debt, or the financial mistakes of the past, because I don’t want to miss the view from the top by looking back the entire ride. The point is, we are where we are, and how we got here has been important in shaping our personal finance belief system going forward.

That’s part of living with no regrets. You accept the mistakes you’ve made along the way as learning opportunities, and keep moving forward. So much of our lives is wasted rehashing over and over again the mistakes of the past, rather than living in the present, and planning for the future. Well, a couple years ago we decided enough was enough. We were sick of being in debt, and we wanted out. So we finally got busy making changes and stopped making excuses.

We developed a plan to boost my income. After dabbling in a number of part time job opportunities, and even resorting to mowing lawns on the weekends, I decided to try my hand at writing. Of the few people I shared this idea with, only my wife and my mom didn’t laugh out loud in response. They knew my passion for writing, and believed in me. One of the things I’m proudest of was that Frugal Dad did become a relative success before my mom passed away, so she was able to know that my perseverance paid off. I only wished she had lived to see us cresting the hill.

Getting the blog off the ground wasn’t easy. I had a $0 marketing budget, very little experience in the online world, and no friends or contacts in the field. I started with a brand new domain name, FrugalDad.com, rather than buying an established name with page rank and traffic. I bought a $5 theme, and had one of my new blogging buddies work up a logo (he’s gone on to become very successful at logo/graphics work for other bloggers. Check out his work at LogosforWebsites.com).

For the first year all I did was write an article every single day and comment on as many other blogs as possible. Some nights I stayed awake well past midnight writing the next day’s blog. Other days I woke up at 4:30am to answer emails, comment on other blogs, and try to network with others. It was an all-out guerrilla marketing assault! My plan was simply to out-hustle everyone else, both with my blog and at my full-time job – the two fastest ways I could increase my income short of selling my own plasma (believe me, I considered it).

In addition to boosting our income, we had to get control of the other side of our personal balance sheet. Our expenses were out of control. At the time we had two car payments, a small pile of credit card debt, student loans, and even medical debt left over from the birth of my daughter. We took vacations when we couldn’t afford them. We shopped when we didn’t have money. We were basically living paycheck to paycheck.

We decided to draw a line in the sand. No more increases to the monthly budget. If we signed up for a new membership, we’d have to cancel another one (or two) to offset the new expense. We started clipping coupons, and actually thinking about ways to save money on groceries. We stopped going to movies, and started using our previously underutilized Netflix account. I sold my beloved Chevy Silverado and drove a 19 year-old van. We basically committed ourselves to a frugal lifestyle at a time when living frugal was not yet very popular.

The result of all this hard work? We now find ourselves less than a month from being debt free. My wife and I have a new motto: “Never again.” Never again will we go back to owing money. Never again will we limit our opportunities, and our choices, by being servants to a lender. Never again will we be at the mercy of bankers’ whose whims exerted control over our lives with FICO threats, interest rate spikes and ridiculous practices such as universal default. We plan to make ourselves immune from such policies in the future.

Our hands are in the air. Our eyes are open wide. This is going to be a fun ride!

Post by Frugal Dad

As the old adage goes, when you find yourself in a hole, stop digging – a classic piece of advice to be heeded by those who have found themselves jobless and getting further and further into debt.

Image by Coljay72

The downturn in the global economy has struck hard, and some people are suffering from the brunt of the fall out more than others. Unemployment numbers are at their highest levels since the financial turmoil of the 1980’s, and the situation only seems to be getting worse rather than better. And because lending was totally out of control in recent years, many of those who are now unemployed have access to large sums of money on credit, which they use unwisely with no means to repay their debts. It’s a predicament that could all too easily get out of hand, further compounding the amount of debt owed.

To ensure a bad situation doesn’t get any worse, it’s important for those currently unemployed to nip their bad habits in the bud and set up a good survival strategy so their chances of incurring yet more debt are limited. Here are a few ideas that will help you escape sinking further into debt while looking for work:

1. Devise a Budget

Before you know what you can spend, you have to know what you have available. The only way to do that is to draw up a budget. It doesn’t have to be anything fancy; you could do it on the back of an envelope, if you like. Start by tallying up what money you have available (severance package, spouse’s income, savings, unemployment insurance, etc.) and then divide by six – the amount of months it may take you to find a new job. If your geographic area or industry has been badly hit, you may need to plan for longer. You will then have more of an idea of how much money you have available to spend each month.

Now tally all of your monthly outgoing expenses. Start with the most important ones – your rent or mortgage, food, and utilities. Then move down the list: travel, car expenses, health care and any outstanding loans or credit card debts. Get everything down on paper.

You are left with two numbers: one representing your income and the other your expenses. Provided the income is greater than the expenses, you should be fine, but those who are unemployed will be very unlikely to be in this position. If that’s the case you need closely scrutinize what you do with your money.

2. Make Do With Less

It’s important to take a close look at your spending habits and see what you can do without – at least temporarily, until you’re back in work. Depending on the circumstances, you may have to be quite brutal. It’s time to ask yourself what are necessities and what are luxuries. You may need to forgo the luxuries for awhile.

Do you really need deluxe cable television or satellite TV? Do you need new clothes or Starbuck’s lattes? Probably not. It might require some tough questions to fully determine what you can and can’t afford on your budget, but in the long run you’ll be better off for having made the sacrifice.

3. Look for Additional Sources of Income

While you’re job-hunting it might be useful to think about other ways you can bring in some much-needed cash to keep you going.

• Declutter – now might be the time to sell some of your extra belongings on eBay, or in a garage sale. It will give you something to organize, help clear out some of your cupboards/closets and bring in some cash.
• Consulting – do you have a skill or a knowledge which you can offer on a consulting basis? Can you teach someone else how to do what you do? Would someone pay for your expertise in a certain area?
• Start your own business – is there a business idea you have always wanted to explore but never had the time? Now might be the right time to draw up a business plan and seek funding.
• Rent a room – Do you have a spare room in your house that you could let to help pay the bills?
• Casual jobs – don’t overlook dog walking, babysitting or doing yard work. They will get you out of the house and interacting with people, which is important for developing your network.

4. Fight Depression

It’s natural to feel depressed when you’ve lost your job, especially one you’ve had for a long time, and it’s hard to not take it personally. You must do everything you can to fight the urge to get down in the dumps. It’s all too easy to start charging everything to your credit card in an attempt to cheer yourself up, even though you know it’s the wrong thing to do. Thinking, “Oh, I’ll pay that off when I get a new job.” That will only lead down the slippery slope of debt, and the further you get into debt when unemployed, the longer it will take to get out of the red when you’re back in work.

Acknowledge that you’re experiencing a temporary set-back, adopt a positive attitude and you’ll soon get back on your feet and find another job. It’s important to keep physically active – go for a walk everyday – it doesn’t cost anything, and avoid day-time TV like the plague – it has a tendency to suck people in, keeping them from focusing on what they should be, and that’s finding a new job.

5. Ask for Help

Now is not the time to go it alone. Put your pride aside and ask your friends and family for help – whether it’s emotional support, a loan or a hot meal; their assistance will make a huge difference. There are resources in your community too which can help, whether it’s a food bank, a charity, or job search assistance.

If you’re eligible for government assistance, then be sure you apply for it. You may have to jump through some hoops, but it is better than losing your house or saddling yourself with additional debt.

And, if you’re not going to be able to meet payments on your mortgage or credit cards, then you can’t ignore the problem. You must phone them up and speak to them. Explain your situation and ask for help in finding a solution. Banks and other creditors are much more understanding than you would think. Don’t be tempted to go to debt management agencies, either. They will only charge you to do what the banks will do for free. Creditors just want to get their money back, so will help you devise a repayment plan that suits your budget.

These are trying times. Remember that what doesn’t kill us makes us stronger. Keep your focus on finding a new job and follow these tips to help you meet that goal without falling further into a hole.

One form gets your resume on 75 top career sites. Click Here

Post by Frugal Dad

In our own household we have reduced outstanding credit card debt by about 30% since May of this year. We have been 100% sold out, gazelle intense about being credit card debt free, and if it weren’t for a few family emergencies we would have closer to 50% paid off by now. The bright side is we did not accumulate any new debts during these mini-crises.

How are others doing? Here’s a look at the Credit Karma survey results from last month.

Average consumers had:

• $6,818 in credit card debt
• $193,036 in home mortgage loans
• $52,559 in home equity loans
• $14,449 in auto loans
• $26,368 in student loans

$26,000 in student loan debt? Yikes! That figure and the home equity loans stood out to me. Combined, those two categories alone represent nearly $80,000. Wonder how many people took out those loans for the tax deduction on interest, or to pay off other debt, and just ran it back up again. I also can’t help but feel bad for new graduates who racked up thousands in student loans to find one of the worst job markets in recent history. While the outstanding debt balances still seem high, I’m hopeful that the downward trend continues.

Another nugget from the survey is that Midwesterners seem to have the lowest amount of debt. Wonder what lessons from the Midwest we could learn throughout the rest of the country? I know in many Midwestern states there is a thread of self-sufficiency running through many households not felt in other parts of the country. Homes are probably more reasonably priced than in other areas of the country, too.

I’m curious to hear from you on this one. Have you also paid down debts during the recession? Do you think you would have done it otherwise, or was the negative economy a motivating factor?

Post by Frugal Dad

1. Get angry

We go out of our way to repress anger in our society, but anger is a perfectly normal human emotion. An emotion that when harnessed properly can lead to powerful changes.

Find a way to personalize debt, and then get mad as hell at it. I hate debt for a lot of reasons, but a big one for me was the fact that debt limited my opportunities, and those of my family. My kids have missed out on opportunities to make lasting memories because we’ve had to skip family vacations. I had to stick it out in a soul-sucking career because we were too in the hole to consider moving. I spent many weekends mowing lawns a couple summers ago trying to generate extra income to pay down debt, all the while missing my family dearly.

At some point I said enough. I went from being indifferent, to depressed, to downright mad. That debt was not going to beat me. I would no longer ignore it while it festered, eating away at my future income and robbing my family of opportunity.

2. Stop spending money, cold turkey

When deep in debt you don’t have the luxury of saying things like, “I’ll try to spend less next month.” No, you WILL spend less next month. With the zeal of a heart attack survivor starting a new diet, prioritize your household expenses. Anything not contributing to food, shelter, transportation, health and basic clothing gets cut. Period. No excuses.

• Drop the cable
• Cancel home phone
• Cut out the gym membership
• Get rid of the yard service, the exterminator, and Netflix
• Turn up the thermostat
• Brown bag lunch
• Have a no-spend weekend
• Ride your bike to work
• Eat rice and beans

Get drastic. Get creative. The deeper you can cut spending the more money you can direct towards paying off debt. And the more money you can throw at debt the faster it gets out of your life.

3. Eliminate opportunities to go back into debt

Got a problem with credit cards? Cut them up. Order too much crap online? Erase all profiles storing order information and destroy anything with a credit card number on it. Have a thing for cars? Sell the one you owe $20,000 on, and buy a $1,500 piece of junk to get back and forth to work. You’ll discover true friends couldn’t care less what you drive.

Have trouble in stores? Stay out of them. Shop every other week as much as possible, and only enter the store with a physical list of things to buy. Exit store with only things from that list. No excuses. It doesn’t matter what’s on sale, what’s on clearance, and what you just “have to have!”

4. Focus income towards your debt like sunlight through a magnifying glass.

I recall from my youth that light from the sun when filtered through the lens of a magnifying glass and focused on a particular spot is strong enough to ignite a flame. That’s exactly how you should approach paying off debt.

Focus as much of your income as possible on the next debt in your snowball. That debt should be sweating like a guilty criminal under the bright lights of an interrogator. Work overtime, pick up a second job, start a side hustle. Do whatever it takes to get your income up and direct all additional income towards repaying your debt.

5. Do not backslide, do no retreat, do not give up.

At times, following through on your financial goals will seem like an uphill battle. For instance, sustaining momentum when paying off debt is very difficult. Quick wins give way to long battles with high-balance debt, and it might seem like you are getting no where fast. However, as long as you are making progress, keep chopping away.

Another danger presents when things start to go well. Complacency begins to creep in. You have paid off 75% of your debt, increased your income, and decreased your spending. Suddenly that $1,500 a month you are sending to pay off student loans starts to look pretty good on a television, or on that vacation you skipped the last two summers.

This is a dangerous place to be, because the more comfortable you feel, the more risk there is you will give up and live with that remaining 25% of debt for the rest of your life. Keep your head down, your legs driving and sprint all the way through the finish line. And no matter what, do not quit until all balances reach zero.

Post by Frugal Dad

With the summer half over, and no vacation plans on the horizon, we have decided to schedule a long weekend in the near future for a short trip somewhere close. It’s a reward to ourselves for hitting a major milestone in our debt repayment plan – we are now completely free of car debt for the first time in our 11-year marriage!

Ideas for Setting Up a Getting Out of Debt Rewards Plan

• Share the rewards with your friends and family. Get everyone fired up about getting out of debt. For those with kids it often helps to let them know about the goals, even if you substitute dates for dollar amounts (i.e. we would like to pay off our car by September, rather than we need to pay off $9,000 in car debt). Besides getting them excited about getting out of debt, it also helps soften the blow each time you say “no” to their request for a new toy. They know the whole family is on a plan to get to debt freedom!

• The reward should be in proportion to the level of sacrifice to achieve the related milestone. In other words, don’t schedule a cruise to celebrate paying off a $300 medical bill. But do schedule one (if that interests you) to celebrate paying off your $40,000 in student loans!

• Put together a sinking fund for your “Rewards Account.” The last thing you want to do is celebrate paying off debt by charging a trip for the family to Six Flags. Instead, create a sinking fund in a dedicated checking or online savings account, and move some money out of each paycheck there to fund a “Rewards Account.” When you hit your debt milestone, withdraw your cash and enjoy!

• After celebrating, get right back to work paying off remaining debts. Now is not the time to grow complacent. As soon as your vacation is over, or you’ve spent some time enjoying your new purchase, get right back into your debt snowball plan and work towards that next milestone.

Getting out of debt is as much about being disciplined emotionally as financially. If you become burned out with your debt repayment plan long before you pay off 50% of your debt, chances are you will never make it to debt freedom. Planning a few rewards along the way will help keep you and your family on track.

In case you are wondering, our next milestone to celebrate is when we’ve paid off all but our final credit card. The reward? A new living room sofa. When we are totally debt free? We’re finally going to Disney World!

Post by Frugal Dad

In 2006 the Rutgers football team made a big splash in the world of college football. They even knocked off Lousville that year, who at the time was ranked as the #3 football team in the country. It was a huge win for the Rutgers program, and their new coach, who began to draw national media attention.

I noticed during the game that players were making a “chopping” motion after big plays, and a number of coaches joined in. I didn’t understand the celebration, because it looked to me like they were simulating the referee’s call for a personal foul. After searching around the web, I discovered they were “chopping wood,” which was the visual representation of a mantra the coach had brought to Rutgers.

An AP story from that year describes the motivation behind the phrase “keep chopping wood.” Apparently, the idea was developed by a sport psychologist, and adopted by a number of coaches as a battle cry for teams trying to rally from behind. I like how Rutgers coach Greg Schiano summed it up:

“Right now we’re in a bad spot, we’re in the middle of the forest, it’s all dark, we can’t see. Get an ax and just start chopping away.”

That’s the approach we have taken to debt repayment. Some trees (debts) were taller than others; some bigger around. It didn’t matter, we just kept chopping, and eventually those trees began to fall. To most people, it might seem like it would be easier to borrow a chainsaw-it’s more efficient than an old ax. But swinging that ax hurts, and that pain is an important part of the process because it is a constant reminder of why you’ll never venture out into the forest again.

Some months you’ll chop more wood than others. Illnesses, emergencies, and other unforeseen events will inevitably slow you down. Just keep chopping! One word of caution. After a few months of swinging your ax you’ll start to create a little space. Don’t get comfortable. Complacency is the enemy of progress. If you decide to put down the ax and take a little nap, you might wake up to find things overgrown again. Now you’re tired, sore, and once again surrounded by debt.

How do you psyche yourself up to face similar challenges?

Post by Frugal Dad

It might not seem like a big deal to some, but for me it represents finally freeing ourselves of the bondage of car debt. It was a journey that’s taken over a decade. I’ve gone through the sordid history of my ill-conceived car purchases in the past in great detail, so I’ll simply summarize them here.

• My first car was a 1985 Buick Century, handed down from my grandparents. It was a nice car, but it wasn’t a “cool” car, so I didn’t fully appreciate it as a teenager. However, it didn’t have a payment, and the insurance was relatively cheap, which is a big bonus for teenagers. I drove that Buick until the wheels fell off, almost quite literally. It developed serious electrical problems, and one night while parked in my dorm room parking lot in college it caught fire under the hood. We tried to replace some of the wiring, but it was cooked…literally.

• At 21 years-old, and newly married, I leased a brand new Isuzu Rodeo. It was a stupid decision considering the annual salary I was earning at the time was only a fraction more than the lease amount!

• At 26 years-old I was still driving the Rodeo, having paid off the lease by taking out another loan, extending the payments another three years.

• At 27 years-old our family was growing, so we bought a used (the only thing smart about it) 2001 Chevy Tahoe. Since I still owed money on the Rodeo, the bank was nice enough to roll that into the loan for the Tahoe since the sellers were letting it go for far less than Kelly Blue Book.

• After a number of months of trying to sell the Rodeo via private sale, I made the mistake of stopping by a car lot and started stalking a beautiful, gently used Chevy Silverado pickup truck. The salesman worked his magic and talked me into trading in the Rodeo and driving off with the Silverado (and even more car debt).

• It only took a few months of making both payments for me to realize something had to give, and that something had to be my Silverado truck – as much as I loved that truck. I put a “For Sale” sign in the window, and advertised it in the local credit union bulletin. In two weeks she was being backed out of my driveway by the new owner for $1,000 less than what I paid.  I wrote that $1,000 off as stupid tax.

We diligently kept up payments on the Tahoe, but at some point I just got downright tired of having a car payment. I told my wife in April that I wanted to move the Tahoe up in our debt snowball, following what I now know to be the Debt Tsunami style of debt snowballing. It didn’t make sense mathematically, as it was an incredibly low interest rate, and it wasn’t our lowest balance. It was personal. I had decided we had been dragging around a car payment long enough, and since we were within a few thousand dollars of paying it off, I wanted to make a final push and be done with it.

Last Friday we did just that, making a final payoff of about $700, which I scrounged up from freelance work, and from Friday’s paycheck from my full-time gig. The budget will be a tighter for the next two weeks because it was a stretch to pay it off, but I couldn’t wait another two weeks. The instant I pressed “submit” for the final loan payment online I felt the load of eleven years of car debt being lifted.

Now I look forward to receiving the title from our credit union, and for the first time in my adult life, being car debt free. Dave Ramsey’s right; they do drive better when they aren’t towing a car payment!

Post by Frugal Dad

Q: If you have a canceled credit card and its balance is the lowest should you work on paying that one off first or one that isn’t canceled? Also, would you work on paying over the credit limit cards or paying off payday loans first?  We have ideas but just aren’t sure where to start and attempt to tackle the debt.

A: Stacy, there are about as many ways of paying off debt as their blogs dedicated to the subject!  First of all, I commend you for taking control of your financial situation and eliminating the temptation to go even deeper into debt. The usual advice is to wait until your card is paid off to close it, because it can be detrimental to your FICO score to reduce the amount of credit available. Having said that, I’ve violated this advice myself and closed an account before paying if off because of the way the credit card company treated me.

From your question, it sounds like you have a variety of debts including a canceled credit card, an over-the-limit credit card or two, and some payday loans. The standard advice is to pay off the debts in the order of the interest rate – paying off those with the highest rates first. In my own experience, I have found that method of snowballing debt to be tougher to work through because of the lack of emotional reward returned.

I recently linked to an article over at Man vs. Debt about the Debt Tsunami method of paying off debt.  According to this debt snowball style you line up the debts giving priority to the one that is most emotionally charged. or gives you the biggest emotional boost when paid off. In your example, that might be the payday loans, or a personal loan that you’d like to clear from your list of debts. For me, it was my car loan, because since marrying my wife eleven years ago I’ve never known freedom from a car payment.

The other thing to consider is the fees associated with the over limit credit cards. Perhaps it makes sense to prioritize those first until the point that they are all safely under the credit limit and current. Then you can regroup and reorder your debts in the priority that works best for your situation.

Finally, there is no easy way out of debt. For me, the climb out of debt has taken more dedication, more perseverance, and more sacrifice than anything in my life up to this point. However, the rewards at the end are just as sweet. I suspect because you took the time ask for help with lining up your debts that you also have a gameplan for paying them off, and I have little doubt that you can do it. Let us hear from you again when you are debt free!

Post by Frugal Dad

The best way I can sum it up is to say that being in debt sucks. Sorry, I know that’s a bit crude, but when it comes to debt all rules of verbal civility must be tossed. Without further apologies, here’s my list of reasons why being in debt sucks.

1. Debt limits your opportunities. How would you like to pick up and move across the country, or maybe just closer to relatives, or to the beach, or to the mountains?  Perhaps you would like to make a career change, go back to school, or take that international assignment for a couple years. Forget about it. You are in debt.

2. Debt forces you to put up with more crap. Debt forces us to put up with bad jobs, poor living conditions, broken down cars, and cubicle creeps with headsets, also know as debt collectors.

3. Debt is the first thing you think about each morning. Seriously, you know you are in trouble  when you hit the alarm clock at 5:30 in the morning and think, “Hey, that’s the same amount as my car payment – $530. And I have no idea how I’m going to pay it this month!”

4. Debt is the last thing you think about each night. Money problems is a leading cause of insomnia. Instead of drifting off to sleep counting sheep you lie there counting the months until you will be debt free.  You obsess over it.  You worry over it. And the reality that you can do little to get rid of it right away leaves a feeling of helplessness that is truly depressing.

5. Debt eats away at future earnings. For every dollar you pay in interest on debt it is a dollar that could have been spent on something else, and a dollar taken away from your earnings.  It’s like a little debt monster snatching $100 from each paycheck and depositing it in their bank, laughing all the way!

6. Debt makes you desperate. There is a reason people applying for positions with financial authority are scrutinized more carefully. Of those who commit financial crimes, it is not unusual to find out they were deep in debt. It has a way of challenging your morals for the promise of freedom.

7. Debt affects your entire family. Kids may not fully understand the financial ramifications of debt, but they recognize Mom and Dad sure fight about that “d” word a lot.  They don’t know what debt is, but from listening to you they think they’ll always be in it, and being in it must be bad.

8. Debt is a lousy employer. When you are in debt, and over half of your income is going towards repaying that debt, you might as well consider yourself working for the debt. And debt is a lousy employer!

9. Debt plays by its own set of rules. Don’t believe me? Try carrying a large balance on a credit card. One month your statement reflects an APR of 6%, the next 29%. What did you do to deserve it? You just appeared risky to their scoring model.

10. Debt makes even the sweetest life events taste sour. Getting married, buying a house, and having a baby should all represent some of the highlights of your life. But if you are deep in debt, these event only provide temporary relief. Until the bills arrive, that is.

If you find yourself deep in debt, you’ve probably experienced some or all of these feelings.  I hope you are working to get out of debt. If you are not in debt, or have never been in debt, consider this ten reasons to never go into debt. Trust me; it sucks.

Post by Frugal Dad