Getting Out of Debt

Posted on December 13, 2007. Filed under: Frugal Living |

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Photo by Jeff Belmonte

When I was in school, one of my roommates used to tease me about being cheap. I shopped discount, only used cash to avoid credit cards, stayed away from designer names, and was constantly looking for bargains. On the other hand, she was a strong believer in “retail therapy”, was quick to use her credit card and loved designer labels. By the time we graduated, she had a balance of over $10,000 on her credit card, while I had nothing on mine.

It’s not that I am cheap, it’s that I don’t want to be burdened with debt or things that don’t add value to my life. Although I have tried to be debt free, it hasn’t always been possible. There were student loans, but I figured that was an investment in my own future and worth the debt. There is my home, but that has increased in value so is worth owing money to own. But then there is credit card debt, which I can never look at and say what I actually got for that money. Clothes? Gadgets? Meals? Where are they now? There was a time after my first marriage ended and I was a single mother and financially strapped. I sometimes had to use my credit card for emergencies (although it seemed like there was a new emergency every month), and racked up a lot of debt. I am still not debt free, but am tackling it and moving in the right direction. Even with a lot of discipline (and no more emergencies) it will take me over two years to get out of debt.

In my view the benefit of being debt free is more than not owing money, it’s the freedom it provides to make choices with your life. Reasons why I want to be debt free:

  • Save to retire earlier
  • Save to travel and create more memories
  • Owe less so I need less money to live and can work part-time instead of full-time
  • Make even more money by investing. It costs money to owe money, because I have to pay the interest rates. While I can make money by saving money and being paid when I invest it (a basic money market account will pay you 5% per year for your money, while a credit card will cost you around 15% per year for the money you owe—I think of that as a 20% difference).

My basic goal is to give myself more freedom, and being debt free is a great way to get started.

Anne

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  • About

    Musings on how a disorganized woman with a full time job, three kids and a real need to relax is trying to make life simple.

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