Would you like to get out of debt for good? Do you even realize that it is possible to? Do you have any idea how to do it? Well, the first thing that you need to avoid are credit cards. I'm not necessarily talking about major credit cards like Visa, Mastercard, AMX, Discover, etc. I'm talking about credit that you'd get at a department store, gas cards and things of that nature. I'm not saying that having ONE major credit card in case of an emergency is a bad thing, but don't use it for anything other than that.
Do you realize how much money is paid out in interest on an average loan? It's simply incredible how much we'll actually pay to have someone finance us for something that we want. Let's look at buying a new car. Don't get me wrong here. There's absolutely nothing wrong with owning a new car, Garmin bluechart if you can afford it. How much does it actually cost to finance a car that costs $10,000.00 over sixty months at 12% interest. That's being so generous. Well, it's $1200.00 the first year! If your payments are $250.00 a month almost all of your first five months is paying for nothing but interest!
Let's do the same example with a boat. I had this discussion with a friend of a friend not long ago and after we were finished he was ready to sell his. Let's just use the same example as we did above. Ten grand at twelve percent. Well, in this case you're not even using the thing that often. I asked this guy how often he actually used it the previous summer and he said "twice". He said he'd like to use it more often, but he just didn't have the time to do it as often as he'd like to. He also said that it was kind of a headache to tow it all the way out to the lake just for one day.
I asked him if he realized that he had paid an enormous amount of money for the two times he'd used it that summer. I also brought it to his attention that he'd been paying on it every month since then, would continue to pay on it for four more years and, at that very moment, it was sitting in his driveway depreciating in value. This guy kind of chuckled a bit under his breath, but I could tell that he was in DEEP thought and was seriously considering how to get rid of that boat.
Bottom line? Don't go into unnecessary debt. Good things come to those who wait. The only debt you should have is for your house and MAYBE for one vehicle. You really should pay cash for that too. Live within your means folks. I know it's tough to do, but it's also temporary. If you try to do too much too quick you'll never be able to get where you need to be financially. Live lean for 5-10 years and as long as you don't go and do anything really ignorant, you should have smooth sailing the rest of the way.
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