In Step #1 we explained you would never be debt free until you admitted you had a problem with debt and that you realize what the cause of your problem was.
Back in 2000, I was in debt $60,000. Mainly do to me and my first wife's over spending and living beyond our means. This had partially lead to our ultimate divorce. After my divorce I had set down and began a plan to get out of the hole. During Step 1 I had decided, which I already knew, was we had spent more than we made. We went out to dinner every weekend and went on trips and vacations that really we couldn't afford without putting them on a credit card. Once my divorce was final and realizing the root of the problem, I had stopped going out dinner on a regular basis and no longer went on vacations I couldn't afford. Almost immediately charging things on my credit cards had stopped and I began to release myself from my financial prison and set a course for financial freedom.
Step #2
So what is debt? Debt is the amount of money you owe, that needs to be repaid usually with interest and within a specific amount of time. It is money you spend today with the intent to pay with money you earn in the future. What is credit? Credit is the complete opposite of debt. It is the potential to borrow money to buy something like a car or even a home. When you use your credit, you create debt. When you pay of debt, you create credit. The main component of a healthy financial life is having balance between credit and debt.
To most debt is considered a bad thing while credit is considered good. But people do get confused about the two. I have known people who had every credit card they could get their hands on and couldn't wait to brag and show them off. Those same people though, at one time or another, had run their cards up to excessive amounts to end up in their own financial prison. The ultimately had a serious debt problem.
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