Where did the week go? I had planed on posting this by Tuesday and here it is almost the weekend and I'm just getting around to it. Lets you know how I'm doing on being more organized-lol!
So the second lesson last Sunday was on debt myths and on getting your debt snowball rolling. the four key steps to debt reduction are as follows.
# 1 Create and maintain a working budget. Make adjustments as necessary (DONE!)
#2 Get current and STAY current on debt payments ( working on this, mostly for the medical bills)
#3 Save an emergency fund of $1,000 ( DONE THANKS TO THE TAX RETURN!!)
#4 Start attacking the debt. Use the Debt Snowball form. ( may be able to PAY OFF ONE CREDIT CARD IN FULL BY THE END OF NEXT MONTH!!!!!!)
May favorite myths where things both John and I KNEW and once walked in the truth at one time but somehow over the years allowed ourselves to be "suduced" into the world's thinking and sucked us into this cycle of debt. I'll post a few ---some we are guilty of and some we have never done but know others who have
MYTH --You need a credit card to build your credit. The truth is you can get almost any type of loan without having had a credit card. We got plenty of car loans before we ever got our first credit card. Our daughter Ashton and her husband Daniel also got a house mortgage without having a credit card.
MYTH--Rent to own can help lower income people get ahead. The truth is the rent to own industry is the biggest scam of all as you wind up paying out over 1,800% in interest on average. The biggest example is a standard washer and dryer set that you can get for $500---at a rent to own center you would "pay" only $20 a week for the set but most contracts are for 90 WEEKS which in the end makes them cost you $1,800---very few people ever do the math and figure out EXACTLY what the end cost of "renting to own something is"
MYTH --- Car payments are a way of life and you will always have one We have been sucked into this myth over and over. I can't tell you how many cars I have had as it never failed that just about the time the current car I had was due to payoff we went and got another one. All but two of my cars have been "used" so we figured we were getting a good deal as someone else had already taken the "hit" on it when it was new but the fact is financing a car is still debt no matter if it's new or used
Myth buying a new car saves you money because you get a warranty. The truth is a new car loses 60% of it's value in the first 4 years that means a new car that costs $28,000 will lose $17,000 of value during the first 4 years. YOU COULD REBUILD A CAR TWICE FOR $17,000!!! We have totally gotten in over our heads concerning cars by trading "up" when we had a car that needed a repair. The fact is a PAYED for car is cheaper than a car you are still paying on and most will NOT cost you the same to repair in the next 6 years than you would be spending in car payments ( the average new car is financed now for 6 full years!!)
Myth leasing a car is a good way to go The fact is leasing a car is in many ways the same as RENT TO OWN and go back and see that myth for the full facts! Many lease places convince you to "lease another car" as soon as your current lease is up, and so you continue to make a car payment without ever really owning a car! And because you are leasing a BRAND new car you are paying the depreciation on that car for the dealer--they in turn sell it for a profit after you return it or sell it to you after you have already payed out the 60% value loss.
Some of my favorite parts about the class are what I call the "nuggets of truth" or fact statements. Highlights of my favorite are as follow:
Debt is a means to obtain the "I want its" before we can afford them.
The best way to build wealth is to become and stay debt-free!
It's easy to become wealthy if you don't have any payments!
Extreme situations require extreme solutions. Do whatever it takes to get your debt snowball rolling,sell something:have a garage sale---WHAT EVER YOU NEED TO DO TO INCREASE THE INCOME AND OR REDUCE SPENDING DO IT!!!
No comments:
Post a Comment