We are sitting on the precipice of a big holiday, Christmas. And this made me think about the average financial mentality. The trend is to buy buy buy and then pay later. But the time you pay that off (maybe) it is time to buy again! It happens in all aspects of life. Our world is lackadaisical about increasing their debt load. But seriously, it’s time to stop that trend and just say no to debt! Let’s take Christmas as an example. This upcoming holiday is one that is one that many times involves a lot of spending. I get it, we want to pour love out to our families and friends by buying gifts and giving them nice presents. But what is the cost? Are you ending the season in debt? Is that the way that you want to live your life? Adding to your debt each December, paying off Christmas for most of the following year and then doing it all again the next Christmas? It sounds a whole lot like spinning wheels and going nowhere fast to me. I think it’s time to say no to debt!
Changing your Mindset about Debt
If you have dreams and aspirations for a better life, a new house, that big Rv, a life of financial freedom, etc; then living a debt free life is paramount! We need to face the truth. And that truth is that having debt is crippling to these plans! If you want to achieve any of these big goals, the. You have to change your mindset about debt. You have to say no to adding to your debt load. You have to have the mindset that debt is bad and something to avoid!
At one point in my life I was in debt with a mad amount of credit card debt. I wanted so much out of life. I wanted to live in a nice house, travel, buy a new (newer) car and do so much. I had dreams, but I was paying well over $1500 each month the in credit card minimums. I wanted to live my dreams and I desperately wanted to be out of debt. I was in a really bad place in my life and I didn’t say no to debt. As soon as a little credit would open up (due to my payments) we (my ex) would go shopping and max the card out again! Much to my shame I didn’t say no to debt and it just kept building! I needed to change my mindset about debt.
A new Financial Start
The change to this new mindset wasn’t easy. I had to dig myself out of a huge hole! I had to get rid of a lot of debt. For me this happened all in conjunction with the end of my marriage. I made sacrifices during that divorce, leaving with nothing but my personal belongings. I didn’t take anything for the house/property (and the property had no mortgage) or the business that my ex owned that I helped to build. I lived with my parents for a few years after my divorce. Yes, it was humbling to move in with my parents in my 40’s, but it was necessary for me to find a restart. I did everything that I could to give myself a fresh start....one with no debt!
I found what worked for my situation. There are many debt busting websites out there with plans and methods to get out of debt. We will talk about them in a later post. I found what worked best for ME and I steadfastly followed my chosen path. We are all unique and in different situations and times within our lives. We have to find what works for us, and it will be different for each of us.
The biggest aspect of my fresh start was my new mindset. That mindset was the strict adherence to the belief that I would not ever be in debt again!
Good Debt Versus Bad Debt
While my mindset that debt is bad has been at the forefront of my mind since my divorce. I have always had one or two caveats in there. I always knew that while I would like to buy a house outright with cash, that it would be highly unlikely. I also knew that my car was old and that there was a very good chance that I would need to replace a car before I had the cash to buy one outright. While I still believe and would in the perfect world prefer to have no debt, I knew that these were debts that I would consider ‘good debt’.
What is a good debt? A good debt is a debt that you have something tangible that you can easily sell and with the proceeds pay off the debt. In other words, a house or car loan. When you take out the loan the bank is the true owner of the property. If life goes belly up and you can’t pay or they call the loan due tomorrow, you have the property that is worth the amount of the loan and you can sell to pay the loan! Or at the worst case, the bank will take possession. Sure your credit score will take a hit, but you will most likely not be left with some huge debt that you need to be paying off. A debt that will inhibit your future!
So what is bad debt then? Bad debt is debt that you accrue with nothing real to show for it. Sure you have new clothes in your closet. You have great memories of your vacation! The dinner out at that restaurant was fantastic and your family loved those Christmas gifts. But you have absolutely nothing to show for those purchases. If the loan/credit card was called due tomorrow you would have no way to cover the loan! this bad credit. Bad credit is those credit cards that you use so freely! Bad credit is those personal loans that you ask friends for ‘cover me until payday’. It is the month you spend that you have no way to ever recover! And unfortunately there are lots of those expenses in life. We have to eat. We have to buy clothes to wear, unless you live in a nudist colony. But seriously, don’t go into debt to do it! Spend what you can afford and not a penny over!!! Take on the mindset of no new debt!!!
No new debt is a huge mindset to undertake! It isn’t easy to stop the spending and building of debt, especially when you feel like you are spinning your wheels and spending every penny on paying the minimum payments. It is going to require a change in how you look at spending. But if you stop adding debt, those payments will slowly start decreasing your balances. It won’t be easy. It is going to involve changes to your life. It is going to be a complete overhaul. But I challenge you. No New Debt!
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