The Truth About Debt

Here are four myths dangled in front of us constantly:

o debt is the way to build credit
o debt is a tool to be used
o debt is the only way to get ahead
o debt helps you build prosperity

Here are the Truth:

o If you saved $150,000 cash no one would refuse to sell you a home. (it can be done, if you learn to budget)
o Debt is a tool alright, a tool banks and credit card industry uses to become even richer, and keep you poor.
o Anyone believing debt is the way to get ahead is stupid. As long as you don't own something outright, without debt, you are not ahead. You don't even own the item, until it is paid off in full.
o How the hell can anyone believe being in debt makes you wealthy? By definition, debt is NOT wealth! (later I'll explain a bit more in depth, good debt and bad debt)

Some Facts about baby boomers: [ from USA Today ]
56% have car loans/payments
59% have credit card debt
78% still have a mortgage heading into retirement

An additional fact: few boomers have enough money to retire on and will have to work for the rest of their lives.



Debt makes you a slave to someone else, and they become rich. Think of it this way, if you saved and invested every penny, instead of paying on your debt, you would be more than a millionaire, possibly even a multi-millionaire. With that kind of money you could afford almost anything and never owe anyone a dime, or a penny for that matter. Going in debt is a dumb idea. Not getting out of debt is even dumber.

An example: A person making $30,000 a year you will make $1.35 million without interest or dividend payments, during their working life. With just 4% compound interest you would end up with $1.54 million. I admit, it is not realistic because you have expenses which are not taken into account. If you were able to save just half of your income it would result in nearly $8 hundred thousand. Still not bad. This is only a what-if example, an example of what could happen if you didn't acquire debt, but certainly a truth - no debt means you can build wealth. Which would you want: Debt? Wealth?

To get out of debt takes discipline and a lot of will power, but there is absolutely no one that can't do it. No one! Be like the those who built wealth and do the same, create a budget/spending plan.

How to Keep a Budget, Getting Started

You can either use paper and pencil, or ink, or you can make use of spreadsheet, it really doesn't make any difference. First list all the things you need to spend your money on each month: rent/mortgage, food, utilities, transportation, but only those things you absolutely need every month. Then make a list of your debts: credit cards, car loan, other loans. Now it's time to make list of all your sources of income.

Add up each group, by itself first, then subtract what you spend each month from your income. Still have money left over, good. If not, you will have to see where you can cut some expenses to either bring the total to zero or a positive number.

That's not where it ends. Every one of us spends money daily on things like, lattes, cigarettes, gum, candy bars, after work drinks, parking, slurpy's, and so on. Things we can learn to live without or much, much less of.

When I started, I didn't know how much I spend on these things I really could live without. So, I bought a simple pad and kept a pen with it in order to record every single item I spent money on. At the end of the month I was shocked to see just how much money I was wasting, so I cut out many of the items. This savings alone allowed me to make much higher payments toward my debt.

I think you should do the same thing. When you debts are paid off, don't go back to wasting your money on these items, rather this can be a great source of money to put toward savings.



Time to Dig a Little Deeper

To help you get out of debt, cancel your credit cards, every last one of them. Learn to live on cash instead. Once you have been doing this for a while, you will wonder where all the money came from you now have and its because you are not sending it to the credit card companies.

--Do you leave the lights on in rooms you are not using? If so, turn them off.

--Do you turn on the air-cond throughout the night? Set it to switch off after 3 hours, automatically.

--Do you buy lattes, or other specialty coffees each day? Drink regular coffee and less of it.

--Do you buy an afternoon snack? Don't, you really don't need it.

--Do you buy bottled water? Stop, its much cheaper from the tap and often that's all bottled water is.

--Do you eat chips of some kind? Stop, they are bad for your health and too expensive. Eat an apple.

--Do you pay a daily or monthly parking fee? Walk, ride the bike, use public transportation instead.

Take a look at your notebook you've been keeping and see what items you can cut out completely. Then take a look at what you can cut back on, drastically. Doing any of these things will add up to a savings of more than $100 each month which you can put toward paying off your debt.

Define The Purpose of The Spending Plan

Before Creating a Budget

Start by defining what the purpose of the budget is:

o get out of debt
o create an emergency fund
o have money to invest for retirement
o save money for: a vacation, buy a new car, buy a home
o help the children with college
o start your own business/home business
o to worry less about money issues

Create your own reasons and write them down. Then answer, why. Why do you want to accomplish your desired goal(s). And finally, How do you plan on accomplishing your goal(s). After answering these questions you need to answer one more question, are you willing to do what is needed to accomplish your goal(s) (nothing illegal) which includes giving up a lot of things you now waste money on: manicures, spa treatments, minutes on you cell, expensive hair cuts, bling, and so on.

Answering these questions will determine whether you are truly ready to find freedom where money is concerned and begin to build your own wealth. If there is any doubt in answering any of these questions, you are not ready to stop being a debt slave, go back to your life because it will not change anytime soon. If on the other hand you answered these questions with determination, you are ready to shake free of the shackles that debt create and begin living your life!

Starting A Spending Plan

"Debt is the worst poverty" --Thomas Fuller

"Credit buying is much like being drunk. The buzz happens immediately, and it gives you a lift. The hangover come the day after." --Dr Joyce Brothers


Create a budget. If you don't like that word then call it a spending plan or savings plan. No matter what you call it, it still works the same way and you follow the same steps. I'm still going to call it a budget.

Now, it won't matter whether we are living in more financially secure times or in a Recession or even a Depression, keep a budget. You need to have a budget to know, how much money you are making, how much you are spending and hopefully, how much you are saving or investing. Without a budget you can't make a plan to build wealth, because you wont know how much you have to put toward savings.

Also, forbid you should find yourself without a job. With a budget you know exactly what adjustments you need to make and where to not find yourself in financial trouble. Maybe you didn't get fired, but your hours were cut, with a budget you can make adjustments to still be able to pay the bills and wait until things get better.

Without a budget, you just can't do these things.

Not to take you down from a hopeful moment, but here is another very good reason to have a budget, you never know what tomorrow will bring. If history has anything to teach it is this, when times get tough, as they are right now in this Recession, layoffs occur. Earlier on I listed a number of companies that had laid off thousands of people, already, and as I am finishing this book, there are thousands more. Things are only getting worse, not better in the near future.

This is why you need to get out of debt as quickly as you can. You need to start today, not tomorrow, as tomorrow may never come because you keep putting it off and then you too may be without a income. Remember, the debt you are paying on every month, its making someone else rich, not you. By sending your money to credit card companies you are not able to save anything for yourself, or your family, and saving money it only way to get ahead.

The goal of your budget it find a ways to save more money than you spend. When you have a budget worked out, you can learn to customize it, find flexibility in your spending so you can always maximize the amount of money you are able to put aside toward savings. With the savings you will be able to take some nice vacations, put it toward your children's education or even your own, and of course, retirement. By learning to look at your budget and see where you were not able to resist temptation, spending money on spur of the moment items, you can learn to do away with them and have more money for yourself.

The time spent keeping a budget will be offset by the return on your investments and savings.

Move On To Taking Control of Your Finances

So, what do you do now? Promise yourself your will no longer live stupid. Promise yourself you will no longer make someone else wealthy, your the only one who deserves to be wealthy. Promise yourself you will no longer allow your emotions and your money to control you. Don't let commercials, advertising, clever marketing or anything or anyone for that matter ever tell you how to spend your money again. It's your money, take control of it!

One important to note here for couples, it is very important for the both of you to make this commitment together. Do it now! One of you cannot do it alone, you both have to do it together and be completely committed. The income a couple has belongs to both of you, as do the debts, its hers and his, not 'mine' - never ever. Not only is the money both of yours so is the debt, and both of you have to give up things if you ever want to live debt free so you can build wealth. If either of you cheat or are in any way dishonest, you will both fail, together.

I knew a family where the husband and wife each had a chequebook but they never got together to reconcile their bank statement each month. They never tracked what they had, more essentially, they never tracked what they spent individually. They spent themselves into a life of disappointment and became alienated from their sons, throwing money at them in place of love and emotional support. After their sons had graduated from high school they got a divorce. He still continues to live as if, as long as he has checks in the checkbook he writes them, even if there wasn't enough money to cover the check. She on the other hand began to get her life together and is doing better. By the way, one of the sons got the hell out of dodge while the other is a total loser, drug user and sells the stuff too, following in daddy's footsteps. That's all we need, another waste of a life.

Don't make the same mistake, if you have children and I don't care how old they are, sit them down as soon as you can, don't delay, and help them through these very same steps. Better yet, have them subscribe to this newsletter if they are legally old enough. (Have to say that because it seems I can't teach children about financial matters or how to balance a check book or keep a budget unless they are old enough. Go figure, no wonder our society is so messed up.) You can even start children as soon as they can count on how to keep a simple budget - allowance and purchases.

Let go of past mistakes and move onto taking control of your finances. From this day forward promise each other, yourself, to not bring up things from the past, instead learn to forgive and begin working together. After all, wealth is better than being a debt slave for the rest of your life. Making financial decisions together will hold both accountable. Agreed to discuss any significant purchases and never jumping right in, unless it is a real emergency like the pipes just burst and the basement is flooding.

Agree that only exception to this rule will be your own personal spending amounts which needs to be allocated in your budget. This is a great way to start in order to maintain financial accountability with each other at the same time avoiding taking advantage of this freedom.

Managing Your Finances Effectively

The ability to effectively manage your finances has little to do with your ability to understand the markets, how to complicated math, understand inflation, or being able to predict future outcomes. Many financial problems people have are related to behavior and the ability to control that behavior. If you can do basic math; add, subtract, multiply, divide, you can follow along and manage your own finances.

Signs your finances are out of control and heading for disaster:
o Spending more than you make
o Fights or disagreements over money
o Falling behind on bills
o Living paycheck-to-paycheck
o No emergency fund
o No savings of any kind to speak of
o Little to no retirement fund
o Bouncing checks
o Frequent overdrafts
o Using credit cards to cover expenses
o Constant stress and anxiety
o Late, over the limit, or other fees appearing regularly on your statements

There are more, these are just a few that often jump out at people immediately. I know these well because at one point this happened to me.

Facts: If you do not take control of your own money no one else will and you will have nothing when you retire.

You have to take care of yourself.



In order to take control of your money, you have to take a hard look at yourself and admit you have a problem. People want to blame everyone else for their financial problems; the boss doesn't pay me enough, I had some emergencies to take care of, had a wedding or child we needed to pay for, and so on. While circumstances can impact your life causing unexpected financial issues, what it really comes dow to is, you are the problem. How you handle your money and unexpected events are what drives you towards financial success or failure.



Once you made a commitment to yourself to take control of your finances, the rest of the steps are common sense and very easy to follow.

Dave Ramsey describes people who live financially out of control like this: "Living in the Land of Stupid." An in your face statement, but true. I use to live in the 'land of stupid' myself for many years. As I said in the Introduction it took me almost 12 years to understand how money and debt worked. I didn't understand it until I began to take control of my own money. I'm hoping people who read this will wake up and take control of their money much faster than I did and not avoid it because of any discomfort or uneasiness surrounding the topic of money.

What to do now is next...

Let Me Share With You How To Get Out of Debt..

I will share with you ways:
o get out and stay out of debt
o better manage your finances
o what to do during this recession
o how to invest the money you have
o fully fund a retirement account
o and, answer your questions


It is my sincerest hope that it will be of help so you can get on the path of financial control, and building wealth.

It is not an easy road, especially if you have never understood how to manage your money until now. You will read a lot of the same suggestions that many others are giving, highly paid individuals, the difference - I am an ordinary guy and what I learned is better suited toward the average person, not someone following a popular magazine or investor for advice. I can't guarantee you will be a millionaire because that is up to you.

I want to hear from my readers and I will do my best to answer every question by either sending you an answer or I will answer it in the newsletter so everyone can learn from your question. If I am really stumped, be patient, I am doing research to find a way to best help you. I only ask one thing, don't ask me where to invest your money. I am not an investor nor a financial advisor. By the time you read or hear about an investment its time has past and investing in it will only make someone else more money and you, not so much or not at all.

Why Is Debt The Most Agressively Marketed Product

You can't build wealth until you have something to invest and in order to have something to invest you have to get out of debt.

Debt is the most aggressively marketed product on the planet..and for good reason. There is a lot of profit in it! Banks know they can make a fortune in interest rates and late fees by convincing you that you can't do without owning a credit card or taking out other loans for that new car, that plasma TV or the motorcycle or new car... all of which you can't afford. If you could, you would be paying cash, not using credit.

The Purpose of this Blog

The purpose of this blog is to introduced you to the techniques and encourage you to take control of your financial future by getting out of debt and on the road to prosperity and financial freedom.

What you have to understand first of all is that the greatest wealth-building tool you posses is your income. To get you on pace to building wealth, you need to take back your income.



Take it back from whom? From your creditors. Most of us are financially “floating” through life paying out most of our income in the form of debt payments. We make one or two car payments, electronics, home furnishings, several credit cards, student loans, among others.

Not to mention the never-ending mortgage. No wonder we are constantly feeling as though there is too much month left at the end of the money!

Welcome to the Life Without Debt Blog

Welcome to the LIFE WITHOUT DEBTS blog created specially for everyone who would like to know how to eliminate their debts and make Financial Freedom possible.