Dealing with Debt

Call me crazy. Tell me I expect too much. But please don’t tell me that taking 30 years to pay off £2000 of debt is a reasonable expectation. But it appears according to a recent newspaper report that the credit card companies think it is.

While the card companies minimum payments would see a debt disappear over a 30 year period (provided you didn’t add to it) ,with careful handling one reader paid off £2000 in just 4 years. I admire his success.  Four years is a huge improvement on 30. Well done!

But this is still simply not good enough. We are talking about £2000. Not £20,000 or even £10,000 but £2,000.

The same report tells us that “average debt is now a third higher than the average income for a year” So clearly, £20,000 is closer to the mark for most of us than £2,000. How did we get here? When did we learn to accept that it is ok to have low level debt that will take decades to repay?

After all we are not talking about a mortgage. Even at £20,000, we are still talking about relatively small amounts of money. How did we become so conditioned to being in debt that we only ask for a better deal, or a lower interest rate, or more interesting introductory offers?

When did we stop asking, indeed have recent generations ever asked, “Do we need to be in debt at all?”

Some time ago, at a wealth seminar I attended, I was encouraged to calculate the real amount of money I would pay on a mortgage that I had. I had a £19,000 left to repay plus interest. I will never forget the moment I worked it out. I would pay £52,000 by the time the repayment was finished. This meant I would have to earn approximately £65,000 pre-tax to be able to hand over £52,000 for a purchase that cost me £19,000.

To this day, I have never been able to see how that was fair? And to this day I have never been able to accept that this is the best we can expect for our financial lives.

Expect More

The good news is that, since then, I have learned that we can expect much, much more. Debt need not be a fact of life. It need not take decades to pay off the debt you have. You do not need to have debt to have the things you want in life.

The solution lies in simple mathematics and common sense, two subjects which have not been very trendy in recent years I know, but let’s be honest, if I asked you to choose between a little common sense and a little practical mathematics or a lifetime of debt, which sounds easier? In reality, it is actually a lot of fun too. Why be dull?

Drop the Debt

Drop the Debt, is an online programme with a very alternative approach to getting out of debt. This is like nothing you have seen before. It will give you what you need to get you out of debt and more importantly give you back your life and your peace of mind while you do so.

It’s time to shake off those debt cobwebs and plan a financially fulfilling life. I am not promising instant freedom from debt. I am suggesting that you can repay your debt faster than you ever thought possible, that while you do so, you can still have a life and enjoy it more than you have in years.

Most importantly, I will show you how to use what you have learned from being in debt to your advantage in the future. If you thought that being in debt was all bad, think again. There is always something to be learned from all situations, no matter how awful they are, and being in debt is no exception.

In fact, it could well be the best thing that ever happened to you. In the meantime here are some tips to get you thinking about the issue of debt.

Five Top Tips For Rethinking Debt

1. Count The Cost

Total the amount of money you currently pay each month to repay debt. Realise that this is money you are paying for something that is already in the past.

It is not just another monthly expense. It is money you could be putting to better use for your present and your future. Multiply it by 12 to get a yearly figure. Know that this is money you earned this year but which you already spent last year and before.

Think about that.

2. Count The Real Cost

What are you giving up to have debt? If you had that repayment money in your hand, what could it buy for you this month? What could you have if you didn’t have to make this payment to the credit companies, perhaps a holiday or extended time off work, or a course you’d like to do?

Make a list of the things that you would like to have in your life which you cannot afford because of your current debt repayments but which the total of your current debt repayments could pay for.

3. Borrowing Today Is Stealing From Tomorrow

The monthly amount you pay towards debt today could be money you invest for your future.

For example, let’s say your monthly debt repayments are £200. If you did not have debt and you had £200 to invest monthly and it earned 10% annually, over 30 years you would have just under half a million pounds.

So if at 20 years old you got yourself a good investment account, (instead of say, getting yourself a store card), at 50 you could retire comfortably. After all, you are putting aside the £200 a month anyway so why not put it aside somewhere it will grow instead of throwing it into hole that seems never to get filled.

4. Imagine

With money taken care of, imagine how 30 years could pass differently for you. You might well still be working and doing all the things you are currently doing but instead of doing them with a struggle, you would be doing them with the security of knowing that your future is taken care of.

You would know when and how you could retire, AND you would get to live your life without fear and shame and stress of debt.

5. Make Poverty History

I know that you are the kind of person who would like to do give generously for the starving millions in our world.

But it’s not easy to keep on giving when it’s tough to make ends meet at home. Look again at the total of your monthly debt repayments. Take just £20 of that total. If you did not have to pay that £20 to debt, you could pledge it to change the world. You would never notice it but just £20 a month could support another whole life in a poorer part of the world.

One person saving the life of one person, Making Poverty History one person at a time.