This is Step 2 of ‘5 Steps To Achieving Financial Independence‘ – Get Out of Debt Now
Have you ever had to experience something first before you realized its value? At some point in your life you may have said to yourself: “If I had only known then what I know now.” Well, Step 2 Get Out of Debt Now, in our quest to achieve financial independence, was “one of those things” that I put off as a young adult. I just figured I would get around to it “one day.” Then, that one day came and I decided enough was enough. After 18 months and having worked 2 full time jobs, I eliminated more than $12,000 in credit card debt. Looking back it was more than worth it.
The reason I named Step 2, “Get Out of Debt Now” (emphasizing the NOW) is that in order to actually pull this off and become debt free, you are going to have to want it bad enough to stay focused long enough to see it through to completion. There is no in between here. You know your personal situation. Let’s take a look at what we know about the average American Household:
American Household Debt
- The average credit card debt per household: $16,007
- Penalty fees from credit cards were about $20.5 billion in 2009, according to R. K. Hammer, a consultant to the credit card industry. (Source: New York Times, September 2009)
- Average APR on new credit card offer: 14.45 percent (Source: CreditCards.com Weekly Rate Report, March 2010.)
The first thing that jumps out at me is that the average family is paying $186 in monthly interest, just to service their credit card debt. ($16,000 x 14% Divided by 12 months) A long time ago this would have been considered usury. For many people, carrying credit card and other non-productive debt is something they do their entire life. If you fall into the above statistic, please know that over an adult’s lifetime, $186 per month adds up to more than $100,000.
I am only pointing this out so that you can see how ignoring this area of your life can literally mean the difference between financial misery and financial success. You can not achieve financial independence when you are swimming upstream. Getting out of debt will literally put the wind at your back to achieve other goals.
What It Takes To Become Debt Free
Okay, now that we’ve seen what kind of shape the average American household is in, let’s talk about what it actually takes to get out of debt. First, you need to realize that becoming debt-free can take several years. The reason most people never become debt free is they aren’t willing to make the long term sacrifice that’s required. I have heard Dave Ramsey put the mindset of becoming debt free this way: “In order to live like no one else, you need to be willing to live like no one else” In other words, you need to be willing to sacrifice.
httpv://www.youtube.com/watch?v=ze29EqWia6M
I need to level with you here and ask you the following questions: If you don’t get out of debt now, when will you? How long are you going to keep making excuses and paying other people interest? Are you willing to sacrifice your retirement just so you can pay interest to someone else?
I don’t want to sound as if I am nagging, but I really want you to challenge your self here and ask why not get started today? This is about changing the direction of your financial life. Instead of always swimming upstream, learn how to put the wind at your back and become debt free.
Once you are ready to take the challenge and become debt free, visit my article/mini guide on becoming debt free. ‘Do These 5 Things To Get Out of Debt Now‘
Here are the 5 Steps For How To Achieve Financial Independence
Step 1 Earn More Than Your Spend
Step 3 Accelerate Your Savings
Step 4 Become An Expert At Something You Love
Step 5 Accelerate Your Income Build Wealth
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