Last week I discussed the Greek debt situation and compared my own painful education in the college of life experience. But many people may not know how to make the changes necessary to control, manage and eliminate their debt over time. Hopefully this will be helpful information for persons who finally realize that there must be a better financial path to follow.      For a complete discussion and lots of inspiration, go to the library and check out The Total Money Makeover by Dave Ramsey. With many million sold, I saw that you can buy a used copy for as little as a couple bucks or ask a friend if you can borrow his copy.

First, recognize that there is hope, you can live better without borrowed money, and every day provides opportunities to make better decisions. Then decide financial freedom and margin are what you really want. No one can decide to make this a priority but you. Many can talk a good game but it is what we do that counts. Consider yourself to have a life threatening illness that only eliminating debt will cure.

Second, as Dave Ramsey says, when you find yourself in a hole, stop digging! How? You need more income or less monthly expense, or perhaps both. What resources do you have? What can you sell that has no lien against it? Do you have a boat? It takes up room, depreciates, and you have to pay annual property tax on it. My old mentor told me a boat is a hole in the water into which one pours money! Have a garage sale. Every last dollar counts.

Living within your means requires distinguishing between needs and wants. We have very few needs beyond basic food, housing, medical care, insurance, and transportation to our workplaces. Coke, beer, cable, full featured cell phones—these are not needs. Ramsey describes a good diet as rice and beans alternated with beans and rice. If you get serious about cutting expenses and paying down debt, you can gain all these nice things back without the fishhooks of debt attached.

Get an extra job. Find something no one else seems to want to do. One of my friends (who was homeless for a time) used to ride his bicycle from store to store asking for whatever awful jobs none of the employees wanted to do or had time for. Deliver pizzas.

With regard to the bills and debts, pay minimums until you have at least a thousand dollars saved as an emergency fund. When you are skating on thin ice, emergencies seek you out on a regular basis. You must not borrow any more money for them. Keep adding extra money to your emergency fund and you will soon notice that your emergencies are fewer and easier to handle.

Then and only then, put any extra money you can muster onto the payment on the smallest debt you have. It might seem best to choose the one with the highest interest rate, but paying them off from least to greatest works much better. When the smallest is gone, add that monthly amount to the minimum payment on the next largest one. Within months you will see the difference.

As I tell people I see walking slowly with canes or helps, it is not the speed that is important anymore, it is all about the direction! Choose to get yourself into a better place. You will love it.


(Past performance is no guarantee of future results. Advice is intended to be general in nature.)