From Joe: I think this is a great article, and I told Beau, I’m so glad you wrote this. Debt has literally become a first-world disease. As we spend millions of dollars and man-hours every year helping third-world countries cure preventable diseases–which I’m totally in support of, by the way–we hardly stop to consider the diseases (like debt and the “american dream”) that we daily carry around ourselves.
Okay. rant done. On to Beau:
As one that is over coming both of these issue I thought I would share some of my thoughts. You can hardly go anywhere without hearing about the next great credit card, sweet car deal, interest free deal, or how to over come your debt problem. People making money off both sides of your consumer problem.
First lets look at the three parts to the equation in the title.
CONSUMER - A consumer is one that receives goods or services. For example, someone who buys food, buys a car, subscribes to a monthly internet plan, phone plan, or has received medical attention. We are all consumers in some form. Some consume more than others. Consumerism is part of the American way and the American dream.
ENTITLED – Someone that believes he or she deserves something because others have it or because of a standard their family, friends, or society has created. Entitlement is a very big issue American’s are dealing with, especially in a debt driven society. Are we entitled to anything? Yes and No. Yes, we should be entitled to expect a level of comfort and lifestyle, but it has to be grounded in what is coming-in financially to sustain it. But no, because what others created as status quo is not always for you, too.
DEBT – the amount of money, services, or goods owed to someone else. Many people are comfortable living and doing life here. I would remind you that debt means you are owned and controlled by someone or something else. I do not know about you, but I like to be the one in control of my life, not my bills or wants.
I have not met a single person who has had ‘going into $5,000, $10,000 or more in debt’ as their five year plan for the future. I can not recall a single kid in High School that said after High School I am going to go into debt to achieve the American Dream. Some did, however, say they would have to take out loans for school or to get started in life after school with the intentions of paying them off quickly. Debt is usually something that sneaks up on a person or family and then takes over everything they do. Debt can force people to learn to do without or cause even more debt to pile up.
Twice in my life I have been there, and twice I have overcome it. Once with a little help and the second time, well, with some real self-evaluation and entitlement bashing.
The first time was out of High School. I want to college for a Semester. I barely passed High School and had no reason to be in college. A $6,000 loan from the government, and I dropped out after one semester. The first day I stepped onto campus I could not figure out which line was for classes and which we for credit cards. They were everywhere. Handing them out like everyone has to have one, and it will be okay. “3 months no interest.” Put your books and school supplies on them and pay them off over the next three months. Sweet deal…until you don’t pay the card off. Maxed that one out and got a Sears credit card for the essentials. A speaker system for the car and clothes. So about 6 months after High School I was $7,500 in debt.
After getting engaged to my wife she found out about my debt and said I needed to take care of that, because she was not starting out our new life in the hole or by using her nest egg to pay off my debt. Later I will share how I did that. Mind you, it was five years after I started earning credit and destroying it.
The second time I found myself in debt was after college (yes, I went back and have a Masters degree now). We had moved 12 hours from school, bought our first home, started a new job and thought we were doing fine. We ended up maxing out a credit card, owing several thousand to family, and thinking we needed more luxuries in our new home than what we could afford. I thought I had to have a certain level of comfort and extras. We over did it and thought we were okay.
So, what did we do to over come all of this? Well here are 5 things I would suggest for anyone in debt or that would like to keep their money. Here they are:
5 STEPS TO OVERCOMING DEBT PROBLEMS
1. Work independently with each company or place you owe money to. See what you can pay off in once lump sum. (That is what I did with my first round of debt.) I would not suggest debt counseling unless there is no other hope.
2. Anything that is needed like insurance (car, home, medical), phone, food, clothing, and/or medicine: challenge these charges every year! We ended up saving about $340 a month by doing this. Mostly in Medical and Home owner insurance. Tip for phone bill. Just use your cell phone. The longer you are with the same cell phone company the more they will give you the same service for less.
3. Get rid of the extras if you are in debt. Cable, phone (in the home) and cell phones, internet on phones, watering the lawn, fast food, and paying for services you can do yourself. This saved us about $100 dollars. You are not entitled to the extras unless you can pay your bills and save at the end of each month.
4. Make a realistic budget. We joke about being on the Dave Ramsey plan, but we have not made it passed week 1. We realized we needed a realistic budget to see where the money is going and how much is coming in. Many places on the internet can give you free templates and Dave Ramsey’s website helps.
5. If you have done the first four steps and are still short, have your spouse work or pick up another job. Many people think it will ruin your family or even lead to divorce. Last time I checked, over work was not on the list of why marriages fall apart. #1 is money and debt issues. Maybe just for a short time to get ahead. My wife worked part time for about 7 months and after we cut back she was able to quit.
I hope this helps. Nothing revolutionary just one person’s way of overcoming his past and debt with practical ideas. Instead of talking about what happens, make something happen to turn your life around.
Beau Bredow