15,000 Reasons to Stay out of Credit Card Debt

Posted on Posted in Self-Improvement

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At 22 years old it’s possible to purchase a home and to pay on that home to earn equity in it, it’s also possible to save money during this time to buy your next home and begin earning equity in this home. It’s possible to do this while carrying no other debt besides your home and to turn around and sell your second home for a profit. Giving you enough capital to buy your third home and in each of these cases putting down at least 20% while making a modest income. How do I know this is possible? This is my story for the last 10 years and it can be yours too.

$15,000 Worth of Credit Card Debt

But you have to start by eliminating your credit card debt and buying what you need, not what you want. It is possible to get out of credit card debt, even thousands of dollars worth of debt. But you must have a plan and your LifeMap is a key piece of this process. This attitude has served me and my wife well.

“Personal finance is about 80 percent behavior. It is only about 20 percent head knowledge.”

-Dave Ramsey

With the explosion of credit card use, the dot-com boom and bust, and the housing crisis, Americans have found many ways to get into debt or even bankruptcy. According to Bankrate, 37% of Americans have credit card debt that is up to or more than their emergency fund (6 months expenses in savings), and 46% of Americans in the 30-49 age bracket have credit card debt that is equal to or more than their emergency fund. To put a dollar amount to this, the average American has $15,863 in credit card debt, according to Nerdwallet.com. Truly staggering percentages and dollar amounts. No wonder America is in a financial crisis.

There is such a pervasive mentality of needing stuff (that you don’t need), buying outside of your means (Freddie and Fannie anybody?), and a culture of buy now pay later, it’s no wonder we are where we are. Wait, let me go back, anybody struggle with that last phrase? Buy now and pay later. I was listening to talk radio the other day when I heard an ad that shocked me. It went something like this, “buy our widget today and pay for it next month” I’m sure there have been plenty of ads on the radio that were similar, but this one stuck with me. So I did a quick Google search for “buy now and pay later” and within half a second I was assaulted with 234,000,000 results. Unbelievable.

Buy Now, Pay Later

Here’s my problem with the ad, “buy” now and pay later. Logic tells me if I buy now I am paying now, right? When did we get to a place in society where these two things are separate? Not everyone in America approaches purchases with the pay later mentality, in fact, 28% of Americans don’t use a credit card. My family and I are among the 28% and though we never had any credit card debt, it has significantly helped us save money since cutting up our cards (thanks, Dave Ramsey).

5 Ways to Save

  • Bring your lunch to work
  • Cut down on your coffee consumption
  • Have people over instead of going out
  • Buy used stuff (including cars)
  • Quit using your credit card (unknown amounts of copious savings)

If you take the first three on this list, you could save about $250 per month, by simply not having lunch out, cutting down on coffee, and not going out with friends, but having them come over more. The savings of the other two items on the list will be significantly higher. Start saving today and don’t look back!

What does your credit card statement look like? Do you have a plan to pay it this month, the next month? What are your savings goals for this month, next month, the year?

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