You may not realize what that credit card bill is doing to you …
Bob is a 27 year old truck driver. He dropped out of college after one year and got a job. With hard work and good luck, he is making about $ 35,000 a year. Bob is passionate about remaining debt free. He bulldo his old car from high school until he could afford to pay cash for a newer one. He rented a cheap apartment until he saved a solid down payment on his house. Even during the lean months, he steadfastly refused to build up a credit card balance he could not pay off at the end of the month.
At 27, he's decided he's tired of his job and would like to change directions. By living within his means and staying out of debt, Bob has enough money in the bank to take some time off, get a part time job, and go back to school. He has visions of owning his own business one day soon – and there's nothing to stop him.
Now meet John. John is in his 40's and is in upper management with his company. He's making more than double Bob's salary, but he's had a different outlook on life. John has never been afraid of debt – he figured as long as he could afford to pay the bill he was ok. He has a very nice house, a brand new $ 40,000 car, lots of new sports and recreation equipment, and travels extensively on his vacations. And he's done it all on credit. John was living this lifestyle before he could afford it. Now, he's almost taped out – his credit cards are maxed out, his house is double mortgaged, and even though he's making a great income, he has lacked the lifestyle, peace of mind, freedom, and opportunity Bob has.
Externally, anyone who saw the two would think that John is the greater success. But the truth is John is trapped. He may be tired of his job. He may want to do something else. He may wish he could spend more time with his family than at work or have a business venture he'd like to pursue. But he spent his money before he had it, and now he's paying the price.
Most of us think that the key to Financial Freedom is making a lot of money, but we see from our two examples that that's only part of the equation. The other part is lifestyle management and debt avoidance or debt elimination. If we plan wisely, stay out of debt, and control our desires to spend beyond what we can afford, we can enjoy a great amount of financial independence and have money to spend on things we really want to have and do, even on a very modest income.
However, for most of us, this message comes too late. Anyone buried in debt will agree that it would have been better never to get into debt. But that does not help much now. What we need now is some help undoing the mess we made.
Stay out of debt. If you're in debt get out. Do not take out another loan, declare bankruptcy, or sign up for credit counseling services, which can damage your credit. Instead, do your homework and educate yourself on the steps you can take to get back on solid financial footing, no matter what your present situation is.