It’s Time to Kick Your Debt to the Curb

There is no such thing as ”good debt.” Debt is debt and it will not go away until you pay it off. Everyone will have their opinion on this, but I believe that staying on track with no debt will give you a stress-free life.

Some people believe in no credit cards and cash only. I personally enjoy having my credit card especially since it comes with benefits and rewards. I also like having it to purchase items online, it is more secure than a debit card. However, having a credit card comes with great responsibility. Don't spend more than you make.

This is where you budget plan comes into huge play. If you keep track of your budget and purchases then you should not be going into debt because every dollar is accounted for.

You do not need 10 credit cards. Don't fall for every store's "if you get approved today you will get 10% off your purchase" or "when you get our credit card you will save 5% every time you shop with the card." If you are wanting to have a credit card or two then research and decide what is best for you. The cards that I have are:

• American Express Gold Card for most of my purchases and I get points that can turn into cash, giftcards, etc.

• TJ Maxx Mastercard for my TJ Maxx and Homegoods trips and I get $10 rewards

• Ulta Mastercard for my Ulta trips which are very rare, but I get points for when I do go and then can use them for the next trip

• Best Buy credit card for appliances and I pay monthly without interest (did this with our washer & dryer set and now our fridge)

If you have to make a bigger purchase and you can't pay for it right away (appliance, furniture, etc.), there are companies that have plans with no interest. We use our Best Buy credit card for our appliances and we like to just do the payment plan because it is smaller payments with no interest rather than a huge chunk of money going away.

Now let's talk big, big debt like student loan debt.... I have been there, done that. There are two approaches for payments. 1. Pay the loans by highest interest first ( I did this and encourage this approach). 2. Pay the loans smallest amount to the highest amount (called the snowball effect). There is a strategy to each one. Paying the loans smallest to highest is more encouraging. Some people need this so they feel like the accomplished something and can keep going. I did it by paying by the highest interest because it tacks on more money to the principal. I did not want to spend anymore money than necessary. Just paying in two years added $5,000 extra dollars to my already large amount. Paying off my student loans was the best feeling because it was an accomplishment and a relief to no longer have those monthly payments. You can do it!

When it comes to housing, don't go house broke. Whether you are renting or purchasing, do not pay more than you can afford. Try to allocate 25-30% of your income for housing. We were in an apartment for a year and a half until we were ready for ours. Keep an eye on the market to see when the best time to purchase a home. You don’t want to buy something overpriced that needs a lot of work.

Moving onto the car business. Don't buy a car you can't afford, keep in mind you will also have to pay for insurance and upkeep. You don’t always have to buy the newest car, it loses value the minute you drive off the lot. Luxury cars are nice but typically run $$$ when it comes to upkeep and repairs. Try to find cars that last and get good gas mileage. This will save you on gas money.

If you are in debt, continue to make payments and pay for the necessities. You have to be strict in order for this to work. You will have to say no to some things, but it won’t be forever. I love the saying Dave goes by “live like no one else, so you can live like no one else.” While others are drowning in bad decisions and debt you will have financial freedom.

Good resource: Dave Ramsey's The Total Money Makeover