let’s get excited! Let’s get pumped up! Let’s crush this freakin’ debt and start living life on our own terms!!!
Every small action matters. Complete each individual task and you WILL see results.
The journey of 5,000 miles starts with a single step, so let’s get stepping!
Notes
Notes
Notes
CHAPTER 2
Understanding the Problem: Why Debt Sucks
In this chapter you’ll learn:
•Why destroying your debt is the key to building wealth
•How destroying debt has affected our lives
•The ‘Golden Rule’ of personal finance
•How to assess the damage and acknowledge the problem
Debt sucks.
But you already know that, don’t you?
Maybe you’re buried in debt and struggling just to keep the bill collectors at bay. Perhaps you’re making a good salary but still feel like you’re living paycheck to paycheck, unable to save any of the money you have coming in. Or, maybe you’re tired of schlepping away at your job and dream of doing more – if only your debt obligations weren’t keeping you stuck without any options.
Once you discover how debt is destroying the power of your paycheck and commit to eliminating its burden, you’ll be able to live life on your own terms and explore options you never knew existed. You’ll be able to harness the power of your paycheck to fund your savings goals and spend your money on the things you really want.
Pretty cool right?
We think so.
What’s Wrong With Debt?
So, what’s wrong with debt anyway? Being in debt is normal, right? Isn’t it just a fact of life?
It doesn’t have to be.
Yes, debt seems normal in America… almost inevitable. After all, as of 2015, the average indebted American household owes almost $16,000 in credit card debt, over $27,000 in auto loans, and over $48,000 in student loans. And that doesn’t even touch mortgage debt! According to the numbers, Americans fork over an average of nearly $6,700 a year in interest payments alone! That’s a whopping 9% of the average household income.
That means we’re putting more of our income toward interest each year than toward our own retirement savings! When you really think about it, that’s absurd. With those figures, it’s no wonder so many Americans struggle to make financial progress1.
While being in debt may seem “normal,” we barely comprehend what debt actually means for our lives. We’re so used to it hanging around our necks, we’ve grown numb to its effects. We don’t have the foggiest idea what it’s costing us.
At least, my husband and I sure didn’t… until we finally dug into our debt.
Our Battle with Debt
TRUTH #1:
Debt is the single biggest obstacle standing between you and the life of your dreams.
How do we know? Because we lived it.
For years, we muddled through a normal debt-filled existence. We had a house (with a mortgage), two cars (with car payments), and regular jobs (with student loans). To top it off, our spending was out of control.
Like most people, we never really noticed our debt. We were making a nice living, but we couldn’t seem to save a thing… nor did we really care. At the end of the month, we paid our bills but never stuck a dime into our savings accounts.
We had gotten comfortable with our debt. Paying it off was just another part of everyday life. It was there and we knew it, but we didn’t grasp what it was costing us.
About that time, going to work became a chore. Jobs we once enjoyed were suddenly becoming more and more of a drag. And, why wouldn’t they? We weren’t working so we could live the lives we wanted. Instead, we were working simply to pay back our debt.
We had to make a change. Our time in the funeral industry taught us that life is precious. We were giving up our precious time – our lives – to earn money that belonged to our debts, not to us. In essence, we weren’t just wasting our money; we were wasting our lives.
So, we pored over our bills, totaled up our debts, and examined our spending habits. We recognized we had a problem. After adding it all up, our total debt (minus the house) was came in around $50,000. We made the immediate decision to pay it off and never go into debt ever again.
Over a period of 18 months, we cut back on our spending, used the extra money to aggressively pay down our debts, and ended up destroying every debt we owed but our mortgage.
Finally, we could breathe a small sigh of relief. Our debt was gone, and we felt like we’d hit the lottery. Instead of shelling out thousands of dollars a month toward our debt, we were able to save that money and do with it whatever we pleased.
The Power of Your Paycheck
Want to know the biggest key to getting out of debt and building wealth? Chances are, you have everything you need – you simply don’t know it yet. That’s right: Your most powerful wealth building tool is your own paycheck.
It seems obvious, right? But it’s absolutely true. The key to growing wealth is earning money. And for the vast majority of us, that means earning a paycheck.
TRUTH #2:
Your paycheck is your most powerful wealth building tool.
Unfortunately, too many of us are quick to dismiss how powerful our paycheck actually is. We think we don’t earn enough, and we convince ourselves that we need to earn more money if we ever hope to get ahead. But the vast majority of the time, nothing could be farther from the truth.
In reality, we simply haven’t figured out how to harness our paycheck’s power…yet. Instead of using our income in service of our own true goals, we buy things we don’t need or even want. Worse, we finance these purchases with money we don’t have, undermining the power of our paycheck by shackling it to the service of those debts. Here’s another truth that took us a while to grasp:
TRUTH #3: Debt is the enemy of income.
Racking up consumer debt is the fastest way to destroy your income and the ability to build wealth that comes with it. But it’s not just the debt itself that hurts. It’s the fact that you don’t realize how much your debt is really costing you.
When
