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If you are reading this and are thinking this post does not apply to me, I have no debt! Congratulations! I hope that I am in the same boat as you too one day. But if you are swimming in debt -like myself- then welcome aboard. Sit back, kick off your shoes, and let’s talk about debt.
First off, let me tell you that you are not alone on this so called “sinking ship”. There are millions of people (79% to be exact) in North America who are in same situation as you and I. From those huge student loans that we had to take out because we had to get an education, the first car purchase when you got your first job (after just graduating and still having those student loans), and then that credit card that the bank was oh so enthusiastic to give you. We all know what it’s like. The banks are very giving if you make your payments on time but not so forgiving if you cannot make a monthly payment. Luckily for me, I have not missed any payments but have definitely made those minimum payments for months on end.
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Reflecting back, I think one of my misguided purchases would have to be the new car four months after starting a job. Yes I had a full time permanent position and yes I needed a good reliable vehicle to get back and forth on that 3 hour drive per day (on top 12 hour shifts). But in hindsight I feel a car payment is the worst mistake anyone could make unless you are financially stable. I took out a $26,000 loan for 6 years making $49,000 a year. Honestly, who in their right minds would allow a 22 year old make such a mistake. But when you go to a dealership they just want money. It doesn’t matter how to get it or how to pay it back as long as they make the sale. On top of a brand new vehicle, now you need top quality insurance which costs an arm and a leg. For me that arm and leg costs $180.00 a month -I didn’t qualify for a discount because I didn’t graduate from the right college. Luckily, Ryan sold his truck before we moved and we no longer have two car payments and two monthly insurance payments. A savings of over $700 a month! If you need a vehicle, there are many other ways to obtain one. Smaller loans if you absolutely have to or save for a second hand car. At least that is one less payment you will have to worry about.
I feel being young and vulnerable did not help me in the slightest. I was responsible in the beginning when my credit card was $500.00 but when the bank started offering me higher credit limits I accepted them and was actually proud that they were giving me a higher limit at such a young age. We all need credit at some point for example to have a mortgage but there is no need to have multiple lines of credit maxed out.
The snowball effect is a terrible thing. You think that if you put those winter tires on your line of credit you will pay it back. Wishful thinking really because by the time you get extra money to put on that loan something else breaks or you need funds for another problem.
We can pay back our debt believe it or not!
In order to do so, we must stop making excuses for ourselves. I know that bills have been high for me in the past. I may not have went on trips or bought piles of clothing but I could have been paying so much more on my debt if I was more strict with my spending habits. So nip those bad habits TODAY. Not tomorrow, not next week, start today. Seriously, write up a great budget like I have previously showed you in my “Start Saving Money Today” post. A great business would never succeed without an excellent business plan and the same goes for personal finance.
Stop spending money on five dollar coffees three and four times a week. It’s going to be hard, no one said it would be easy but anything is possible. If you feel you will struggle alone then seek out a financial advisor who can also direct you, help you with budgets and so, so much more. The help is out there, you just have to avail of the resources! I’ll be right along side you the entire way !
You’re worth it.