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Debt: When’s It Going To Stop?

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When was the last time you were out of debt?  Most people haven’t been out of debt since the time they were approved for their first credit card.  We’re always paying bills, but I’m not talking about utilities or other everyday expenses you’ll always have to pay like gas and food.  I’m talking about the credit card debt…the house debt…the car payment debt.  All that debt that just accumulates and most people never get over.  When’s it going to stop?  What’s gonna change?  Perhaps we should start with the first eye-opening question…

How much of each dollar do you spend?

Jim Rohn posed the question, “If you give a kid a dollar, how much of the dollar should he spend?”  Most will say that he’s just a kid and it’s just a dollar, so let him spend the whole thing.  Mr. Rohn’s response to that is this eye opening question, “When would you expect that to stop?”  When will the kid figure out that he shouldn’t spend the whole dollar?  If you’re under a mountain of debt, you’re probably spending the whole dollar.  Even worse, with credit, you can spend more than the whole dollar.  Perhaps you could try this approach…

Don’t spend the whole dollar!!!

The answer to getting out of debt is quite simple, but very difficult.  You need to stop spending the whole dollar.  Instead of spending the whole dollar, set aside a specific percentage of each dollar to pay off debt, create an Emergency Fund, and investing to earn more money.  Mr. Rohn suggests that you only spend $0.70 of every dollar to live on.  The other $0.30 should be put to better use.  Perhaps that $0.30 would be better used by spreading it across your debt, Emergency Fund, and investing?  But putting aside $0.30 for this isn’t always easy.

It’s hard not spending the whole dollar.

I’m sure you’re thinking, “I can’t afford to put aside $0.30 from every dollar like you say.”  I understand and can relate.  That’s not easy.  Perhaps that’s too much to start off with.  Maybe take that number down to $0.10 and divide it across those categories.  I understand that bills need to be paid…I have them too.  Perhaps you need to review your spending and make some adjustments so you can afford to not spend the whole dollar.  Perhaps getting rid of some things you don’t need would help.  Or maybe even a second or side job could help?

The Takeaway

If you’ve been in debt longer than you remember, it’s time for a change.  You’ve probably been spending the whole dollar rather than having a better plan of only using a portion of that dollar to live on.  That’s okay.  You can fix it.  Take an inventory of your expenses.  Look to see what you can cut out.  Figure out what you can cut to save some money and use that money as the portion of the dollar you can use to pay off debt, beef up your Emergency Fund, and invest to make more money.

Maybe you were taught as a kid to spend the whole dollar…a practice that has followed you through life.  When’s it going to stop?  If you keep doing what you’ve always done, you’ll keep getting what you’ve always got.  To expect anything different is insanity.  It’s like watching a movie over and over again expecting the ending to be different each time.  It doesn’t work that way.  You have to make the change and stop spending the whole dollar.

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