Financial talking heads on television and radio try to tell you
how to get out of debt, stay out of debt, or what dance steps to
use to avoid debt. Just about everything they say is the wrong
thing. I don’t mean they are lairs and you should ignore them.
Actually, many of their ideas do make sense. They are wrong when
talking about debt because they say “live within your means”. By
focusing on this phrase, what they are not telling you becomes a
secret - the true secret to avoiding debt. Do you want to know
the secret? If you didn’t, why are you reading this? The secret
to getting out of debt and avoiding debt again is… Living below
your means. I’m serious that this is the true secret to staying
out of debt. If you live within your means you are spending
everything you take in. While this avoids going deeper into
debt, it will not dig you out of debt or keep you out. Living
within your means is like walking on a treadmill, you work hard
but you fail to go anywhere. How do you live below your means?
The best way is to create a spending plan. This can be a simple
hand written graph listing your expenses or it can be as complex
as a fancy computerized program tracking every dollar you spend
through PDA and laptops. I prefer the Spending Plan Creator at
Slave2Work.com, it’s flexible enough to be used on your
computer, or to be printed out. Why is living below your means
so important? When you live below your means you are generating
a surplus amount of money each month. This surplus is money you
use to pay extra on your debts until you are debt free. This
surplus can be used to build an Emergency Fund, develop a
savings plan for your children’s college or prepare for your
retirement. Living below your means is the real secret to
personal financial success. It also will not come easy. We
people like to live as high on the hog as we can. However, this
doesn’t help us have a surplus each month. You might have to
make some difficult decisions to produce a steady supply of
surplus money each month. How difficult of decisions? You may
have to sell your house and move into a smaller rental. Perhaps
you will sell one car, stop eating out except for special
occasions, come home from work instead of stopping by the bar or
even taking on a second job. Be careful of the second job,
though. It comes with more taxes, stress and its own set of
issues. When you are done reading, I want you to think about
what you can do to start creating a surplus this month. What
plans are you going to make, and steps you will take to provide
a surplus to pay off your debt and begin a regular savings
program? After you have thought about them, go talk to your
spouse about creating a surplus. When you are done talking,
writing the surplus creating plan down and hang it on your
refrigerator. If the two of you work together, you will be able
to conquer your debts and put your family back on a secure
financial footing.