How to Get Out of Debt
And Still Save and Spend Money
With
Debt Freedom
By Dante Petrilla
Copyright 2012 Dante Petrilla
No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form, or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise without the prior written permission of the author.
Smashwords Edition License Notes
This e-book is licensed for your personal enjoyment only. This e-book may not be re-sold or give away to other people. If you would like to share this book with another person, please purchase an additional copy for each recipient. If you are reading this book and did not purchase it, or it was not purchased for your use only, then please return to Smashwords.com and purchase your own copy. Thank you for respecting the hard work of this author.
Please note that I mention different currencies in this book from time to time. I may speak of pounds, dollars or euros at times to illustrate points. This does not have any effect on the principals being discussed. These principles work across the board regardless of what currency you are using.
Saving money and getting yourself out of debt are two tasks that many people are finding difficult, if not impossible, in today's economic climate. Take a look at the wages of your average job and put that up against the cost of living and the debt most people have got themselves into, and you begin to wonder how you can ever get your head above water and keep it there. It's just too tough.
Or is it?
My focus here is to show you how you can not only save money, but also get yourself out of debt much faster than you ever imagined possible while you spend money on things you want. It sounds a bit strange and unconventional, I know, but stick with me, and you'll learn some truly valuable lessons that could just change your life.
Before we really get into it, I want to tell you that I used the system that I am about to describe in my own life, and still use it today, and it works. I am very happy to announce that as of February 2012 I am officially debt free. That is a significant accomplishment for someone who has been in debt since he received his first credit card in way back in 1988!
Debt is a monster that will keep you poor, drain all the life blood right out of you and keep you just a paycheck away from living on the streets. I am of the opinion that no debt is good, although some debt might be acceptable, such as a mortgage where you have a viable asset that can potentially be turned over for a profit. It's my belief that we should never enter into a debt casually, thinking it to be a good thing. Getting and using that credit card might feel good in the short term, but there is a terribly high price to be paid.
I want you to know one thing, even though it might be a bit tough for you to hear: Every bit of debt that you have right now is a noose around your neck, and it is choking the life out of you this very moment as you read these words.
The reality is that the vast majority of people have had this debt noose around their necks for so long that they no longer realise it's even there. They just accept it as being a natural and normal part of life. I mean, after all, everyone goes into debt, don't they? The answer is, no, they do not, and I want to tell you, the debt noose is lethal. It will seriously lower the quality of your life going forward.
You should own the things that you have. The things that you have should not own you. Anything that you buy on credit owns you.
Credit card debt, personal loan debt and other worse kinds serve only to keep you in the poorhouse, an abject slave to the institution to which you owe the debt. This is not the way to live your life, and you need to get out of it as fast as you possibly can if you want to have any decent quality of life going forward.
When you make a purchase on a credit card, what you are doing is borrowing against the future. You know, or think you know, that you will have funds to meet the cost of this purchase at a future point, i.e. at the end of the month when you get paid, etc.
An interesting and helpful way to view debt is to look at it like this: Imagine that when you whip out your credit card to buy that 50" plasma screen TV, you are actually taking money from the future you. Because that is exactly what you're doing.
If instead you had chosen not to make that purchase because the funds were not available at the time, and not taken on the high interest debt, you would have had more money to invest in your future. Imagine that you are taking that money from a 65 year old version of yourself who is subsisting on a meager pension, struggling just to buy food and pay the electricity bill. How does that feel? Would you take money from a pensioner like this? Is this the vision you have of yourself for your retirement years? I hope it's not.
You need to examine your debt. Don't be afraid to do this. You need to do this. Many people have the attitude that if they don't look at it, it'll somehow go away or not affect them. Sticking your head in the sand regarding your debt will serve only to keep you in debt, and every day you spend in debt tightens the noose around your neck. So look your debt straight in the face and get realistic about it. Your goal is to totally eradicate it, and if you don't know exactly how much you're aiming to wipe out, you can't tell if you're being effective.
Examining your debt means looking at all of it in detail. How much credit card debt, personal loan debt, mortgage, etc. Look at your monthly payments for each and determine how much of those payments is going toward the interest and how much is going toward the principal. Most people do not even realise exactly how much debt they are in, and if asked on the spot, many would not be able to list off all their debts or have any idea when these debts will be paid off. Simply gaining this basic knowledge and putting it to use will help you in ways you may not yet imagine. Further on in this book, I will discuss means of actually getting this debt paid down much faster than you thought possible.
Okay, so how do I wipe out my debt, you ask. Well, understanding how debt is created is essential when getting out of it is your goal.
How Debt Happens
Consider for a moment that we live in a virtual sea of information, and a very large part of that information is advertising one thing or another to us. Couple this with the fact that we have become a society obsessed with instant gratification. It's now easy to understand that debt is created because we are seduced by this clever and ubiquitous advertising into thoughtlessly spending money that we don't have then and there on things that we don't really need.
It's an extremely simple concept, but if you lack the awareness of it, you can fall so far into debt so quickly that getting out will seem like an impossibility.
Awareness
I just mentioned awareness. Awareness is something that many people lack in so many different areas of life these days, likely because there are so many mindless distractions that we are surrounded by. But awareness of where one's money goes has to be at the top of the list as far as I'm concerned. The evidence of near poverty that so many people find themselves in despite earning a wage, and in some cases, a very good wage, clearly bears that out.
So where does your money go? Do you know? How aware are you of this?
Have you ever had a day when you went out in the morning with a wallet full of money, and then at the end of the day, it's all or mostly gone? You wonder to yourself, where did all that money go? How could it possibly be gone? I've had countless days like this, and I'm sure you have too.
Take a little test with me. Think about this right now. What did you spend your money on this week? What did you spend your money on today? What things did you buy? Get out a pad and pen and start listing the things off. If your memory won't go back as far as a week, just stick to what you bought today.
Once you've got your list done, I'm willing to bet that you forgot probably about 1/4 or 1/3 of what you actually spent your money on. And you can never say to anything on that list that it doesn't count because you need it. Believe me, it all counts because it's all money you're spending, all money that is coming straight out of your pocket.
For example, did you remember and list the newspaper you bought this morning? How about the cup of coffee? The pack of cigarettes? The soft drink at lunch time? The chocolate bar you had in the afternoon? The magazine you bought on the way home? The DVD you bought online while you sat at your desk at work?
This stuff all adds up. You may say that a chocolate bar doesn't cost much - it's inconsequential. Okay, look at it like this: A chocolate bar costs, say, 75p, and you buy one a day. That's £273.75 over the course of a year. That could be a car payment for a month. Do you realise that that's £2737.50 over the course of a decade? The best part of £3000 because you have a chocolate bar a day. Now I'm not saying that you should give up chocolate, but consider what would happen if you instead saved and invested that money.
Now the chocolate bar is just one thing, one small thing that many people buy on a daily basis that they don't need to buy. Can you think of some other things that you buy which you don't need to buy?
Cigarettes? Oh no, wait! I need them! I can't give them up! Well, they might be nice, but they're none too good for your health, and consider this: You might smoke one pack a day (like I used to). On the UK Budget 2011 figures, that's £7 per day. That's over £2500 over the course of a year. That's the price of a hell of a nice holiday for you! And if you look at the cost over a decade, it's a mind-blowing £25,000. Does that enter your head when you hand over your money for a pack of cigarettes? I'm willing to bet it does not. Now what if you had saved and invested that money along with your chocolate bar money? Even with no interest, you're still looking at saving nearly £28,000. That's staggering.
I am not trying to tell you that you need to totally cut out all the "goodies" in your life. I'm simply trying to illustrate to you that the little things you buy all the time without so much as a second thought do add up, and they do add up quite significantly when considered over a long period of time. This is directed at developing your awareness of your spending. And once you have that awareness, and consider what other uses you might put that money to, your mind will be focused on ways of reducing that spending and directing your capital toward more beneficial uses.