Getting out of Debt – and Staying Out

Getting out of debt is tough. Staying out of debt is much easier. Regardless of whether you're in it, climbing out of it, heading down into it, or teetering on the edge of it, you'll probably want to review some of the concepts below to understand your situation.

Click here for specific guidance regarding how to pay off debt. Getting out of a financial hole doesn't work the same for everyone, so use the pieces of advice that I offer and combine with other things that you think will work for you.

Only you will recognize an approach that might work well for your particular situation, and only you can force yourself to implement it. I can only offer suggestions that I think will work well.

Here are some basic philosophies that I recognize when it comes to debt.

You get what you deserve. If you are sitting in a pile of debt thinking about ways of getting out of debt, then the first thing to do is look in the mirror to see who got you there. Understand while you stare at that person that they got exactly what they deserved.

Now, if you think that you deserve better, then surely you will get that too. You will have to work at it, but then hard work should have its reward, and that reward is getting out of debt – something you will justly deserve.

Oh, while you are looking in the mirror, vow never to get into debt again. There is no need for that foolishness. Debt only enslaves you to another.

If you don’t plan it, you won’t make it happen. If you are going to get out from under debt, then you need to make a plan to follow. You probably didn’t have a money management plan in place before debt swallowed you, and that’s how you got into it. Getting out of debt will require a plan.

Without a plan, nothing much will happen. Your ultimate goal will not be realized unless you have specific action items and dates assigned. Laying out the plan is a good way to envision your ultimate success. The plan will also provide you with a tool to monitor and manage your progress.

Credit cards are only a convenience. Many years ago I was talking with a woman who was facing unemployment. She had little savings and no immediate prospects of work. I asked her what she was going to do. She explained that if she depleted her savings, “Well, there are always the credit cards”. Wow! What an amazing statement. I think credit card debt was in her future.

My view is simply that credit cards are a convenient way to avoid carrying cash or writing checks. They must be paid in full each month – no exceptions.

If you adopt this concept, then getting out of debt is easy, because you will never get into it to begin with. Again, Benjamin Franklin has something to tell us: “An ounce of prevention is worth a pound of cure.”

Looking at credit card statements and some of the offerings of the credit card companies can tell a lot about the dangers ahead. I had a $2,300 statement recently, and they offered me a minimum payment of $15. That’s like paying back a friend $1.53 by making one penny payments each month.

It’s clear that credit card companies want you to get hooked on minimum payments and become their slave for many years to come. I choose not to be enslaved. It is a good choice.

Invest in you, your business and your future. When the stock market surges, people come out of the woodwork to encourage you to invest in stocks. That’s crazy. Why invest in someone else’s venture in the hopes of getting 20% return on your investment, when you could invest in your business and get infinitely more return on investment?

I made an investment in my own business and it provided 100% payback of my original investment every month for 7 years. Who is offering that in the stock market? No one.

Such an offer can’t be made because there are too many people that have to share the money. When you have your own business, there is only you and that pesky tax collector that you have to share the money with.

Best of all, you control everything that happens in your business. You control for whom you work, when, what you sell, the profit margin, where you work, the expenses of the business, and your time off. Do you get that kind of say-so at those stock holder meetings? Hell no!

Now, does that sound like a strategy for getting out of debt? Absolutely, and it also sounds like a strategy to accumulate wealth and save money like never before. When I started my own business, I doubled my salary instantly. If that isn’t the way to put debt behind you, I don’t know what is.

Starting your own business isn’t for everyone, but it might just be right for you. My own enterprise was key to getting out of debt for me. See my home based business profile here to get an idea of how I did it.

Declare bankruptcy if you must. Here is another idea to consider for getting out of debt. There are limitations and issues to consider, but it can be a simple way to get the debt off your back, and start fresh.

Sometimes a fresh start is what is really needed. With wolves at the door, it isn’t always so easy to concentrate on meeting your daily needs. The nagging creditors can be a distraction to say the least.

Bankruptcy is a good approach if you are hopelessly lost in a sea of debt that you can’t reasonably foresee paying back. The amount of debt has to be rather large to make it worth your while.

Declaring bankruptcy is not a good approach if you haven’t made up your mind to change the behavior patterns and ways of thinking that got you into financial trouble in the first place. No sense falling right back into the hole of debt because you haven’t decided to set a new course to financial freedom.

Like starting a business, declaring bankruptcy isn’t for everyone, but it certainly is a key to getting out of debt when you really need to do it.

Done with Getting Out of Debt, take me back to Mindset of Frugality