To Get Out of Debt, Get Rid of the Excuses
- 2008 5 Nov
Stuck with lots of debt and little savings? It's easy to find excuses that let you off the hook to change your situation, but it's only a temporary reprieve. One excuse just leads to another and another, and eventually to a way of life. Maybe it's time to dump your excuses.
Excuse: I don't have time to learn to manage my money.
We all have time to do what matters most to us. It makes no sense for you to work as hard as you do, only to end up with no solid assets to show for it.
Excuse: I can't stick with a budget.
Perhaps you've been trying to cram yourself into a budget that doesn't fit. Here's the way to create a plan that will fit you perfectly: For the next 30 days, keep a written record of every dime you spend. At the end of the month, categorize your spending and come up with a total spent for each category. Now, multiply those categories by 12 to get a rough estimate for what you will spend in a year if you keep this up. You'll see immediately where you need to make adjustments. Look for ways to reduce every area of spending by a little bit. Continue to track spending, adjusting where necessary to get it below your income. It takes time to get a spending plan just right, so be patient and don't give up.
Excuse: This purchase will only add a small amount to my credit card balance. I owe so much now anyway, this small amount won't matter.
That $50 outfit, when added to a typical credit card balance of $1,000, immediately turns into a $106 outfit when you add in the interest. It also adds a full three months to the time it will take to repay the balance. Keep this up and you'll never get out of debt.
Excuse: I can save only $10 a week and that's not enough to do anything.
Are you kidding? Weekly deposits of $10, added systematically to an account with an average return of 6 percent will grow to $7,118 in 10 years. Ten dollars a week is significant. Just imagine if you could double that. Sure, rates aren't at that level right now, but they'll come back. Get started saving now so you will be able to benefit from the next upturn in the economy.
Excuse: I'm using all the credit I can get so I can enjoy life while I am young.
Statistics indicate you will live a very long life. The short-lived "joy" of your youthful credit purchases will surely become the enduring bane of your mature years. Old age and poverty shouldn't show up in the same sentence.
Excuse: I don't earn enough to participate in my employer's retirement plan.
Do you earn enough to turn down a raise and a tax deduction? That's what you're doing if your employer offers a tax-deferred retirement plan and you don't participate. The money put into these kinds of plans is free of current taxes and most employers match at least part. That's like getting a tax-free raise.
Check out Mary's recently released revised and expanded edition of The Financially Confident Woman (DPL Press, 2008).
Debt-Proof Living was founded in 1992 by Mary Hunt. What began as a newsletter to encourage and empower people to break free from the bondage of consumer debt has grown into a huge community of ordinary people who have achieved remarkable success in their quest to effectively manage their money and stay out of debt. Today, "Debt-Proof Living" is read by close to 100,000 cheapskates. Click here to subscribe. Also, you can receive Mary's free daily e-mail "Everyday Cheapskate" by signing up at EverydayCheapskate.com.