So you are in debt-who isn’t these days? We live in a society that encourages individuals to go into debt. Credit card tv ads tell us that a trip to Jamaica is just what we need, regardless of whether we can afford it. (That’s what your gold card is for, right? )
Loan brokers want us to borrow up to 125 percent against our home fairness. Even the government just had its first balanced 綜合債務舒緩 budget in a generation and now faces the enormous task of settling over trillions of dollars in financial trouble.
Yet not everyone is in financial trouble. Many people know how to deal with money. Their debts are manageable, and they have money in the bank. That sounds nice, doesn’t it money in the bank? That is what you deserve. In order to get there, however, you are going to have to change some of your thinking about money and learn a few new methods of dealing with it.
People who are not in financial trouble think about and treat money differently than average folks. They know a few reasons for money and debt that escape average folks. Let’s call them the “financially literate. inch If you can set out to relate to money as they do, you will be well continuing your journey to a life that’s not only debt-free, but also prosperous. What we anticipate to do in this book is to show you some of their secrets so you can adapt most of these ideas and tools to obtain out of debt.
Do not feel too badly if you are bad with a dollar, a lot of people aren’t. Money literacy is not taught in schools, and many times parents are too busy trying to dig themselves out of their own financial hole to help much either. Yet, unfortunately for many of us, we learn more about money from our parents than somewhere else. The good news is that learning how to get out of debt and turn into more financially literate is not all that complicated.
The first step in the process is to figure out how you created so much debt, because if you don’t figure out how and why you still have yourself into this pickle, you will get out of debt, but you certainly won’t stay out. So the first question to ask yourself is: Why did you go into debt in the first place?
Sometimes doing debt is inevitable, but often it is not. When money is tight, you have several options; doing debt is just the easiest. Instead of choosing more debt, you might have decided to work overtime and bring in more money, or perhaps you could have tightened your belt and spent less overall. Debt was not your only choice.
There are many reasons people go into debt: some are good reasons, and some are bad. It doesn’t matter. Did you get luxuries you could otherwise not afford? Did a health problem or a divorce run you financially? Was debt your way of dealing with some other sudden, unexpected expense? When you look at the reason why you went into debt, the biggest thing is to notice whether your spending habits follow a pattern. If you can see a pattern, you need to address that pattern as much as the underlying debt.
Consider Mark and Diane. They both make a good living: he’s a mental health expert, and she’s a psycho therapist. They have two kids to whom they are devoted. They send both to private school, which costs a total of $15, 000 a year, and both kids go to summer camp. This expense accumulates.
Mark and Diane don’t buy luxuries, they don’t travel much, and, apart from the children’s expenses, they are very economical. Yet the only way they can pay for everything is by doing debt. They use their home fairness loan and credit cards to stay afloat. Although they would like to proceed to a less expensive neighborhood, they can because they have no fairness in their home, so they really are stuck.
What are they to do? If they’re going to get out of debt, something in their lives is going to have to change. The private school is going to have to go, camp may be out, or they’re going to have to start making more money. The same holds true for you. If you want to get out of debt, you are going to have to identify why you went into debt and change that behavior or pattern.
Debt in and of itself is not a bad thing. Both of us (the authors) made it possible to start our own businesses because of debt; Charlie began their own law practice, and Azriela began her own entrepreneurial consulting business. So we know very well what debt is and why some debt is great debt.
Debt allows you to do things you otherwise normally could not do, such as begin a business, go to college, or pay for a home. Debt constructs buildings and funds investments and entire corporations-even the costa rica government is funded by debt. The secret is to foster debts that help the cause and banish the ones that don’t. Not all debts are bad debts.