B is for Bondage. Nothing ties up your income and locks up your dreams more than the bondage of debt. If you want to turn your finances around, escaping those chains must be a priority.
Truths about debt:
- Debt is a product being sold. Credit is the most aggressively marketed product in the country. Remember that “Life takes VISA” is an ad slogan, not a fact.
- Debt limits options. Lenders must be paid. Any job that covers all of those bills is a requirement, no matter what. And an underwater mortgage can turn a home into a prison.
- Debt increases risk. Being able to pay today doesn’t guarantee tomorrow. Failure to repay leads to threats and legal action, and can result in losses of property and wages.
How to escape:
- Get intense. You can’t passively drift out of debt. Escaping requires passion. It’s time to get angry. It’s time to get focused.
- Get intentional. You have to drive every dollar you bring in towards a purpose. Make a plan for your income. Write it down.
- Stop borrowing. No more new debt. Draw the line here, and get ready to fight.
What do you think? Are you living without debt? How did you escape? What should be my word for Q? Let me know in the comments below!
Let’s look at some numbers for a minute:
The latest Census data has the median household income in the US at around $50,500.
If a household is carrying debt, then their average credit card debt is over $15,000.
The average mortgage is just under $150,000.
The average student loan debt is around $26,500.
The average car loan is tricky to calculate, but we know that the average new car price is over $25,000, and that the average car payment is over $450 with an average period of 72 months.
So, just working on the principle, that’s over four years worth of debt. Which is a lot. Of course, that doesn’t take into account the interest on all of that debt, which will just pile up more and more with each additional month it takes to pay it all off. That also doesn’t leave any room for other necessities, like utilities for that mortgaged home, or gas for that depreciating car, or food.
Even without the home mortgage, $40,000 to $50,000 worth of debt can take two or three years to pay off, if you’re really trying. And you should really be trying, because debt can be a killer.
See, when you take on a debt you have invited your creditor into your life. They now have a say over a part of your income. You’ve lost some of your freedom for the money that was lent to you. It always seems like an easy relationship to get into, but it has it’s price.
Giving other people a say over part of your family’s income means that they indirectly get a say over the other decisions you make about your life. Would you like to change jobs? Maybe you want to go back to school? That better not interrupt payments. Would you like to move to another city? You need to do something about your home, and that underwater mortgage. Any decision that you think about making that has the slightest effect on money in your life has to be filtered through the lens of ‘keeping current.’
That limits your opportunities. We all have dreams and hopes for the future, but if you can’t respond to an opportunity because of your obligations on your debt, then those dreams are now being held prisoner by your creditor. And missing those chances again and again wears down your hope and blurs your vision. After months and years, your dreams are dead and mostly forgotten, except for the barest hint of regret for what might have been.
Don’t let debt kill your dreams. Get out of the rut. Make this the year that you make a change and get back your freedom.
What would you do if you didn’t have any payments? What dream is being held back because you don’t have the money?