If you want to get free from debt, there’s one simple rule you’ll have to stick to – and that is to spend less than you earn. That’s it! Now this may sound like the most obvious thing in the world, but it comes as a surprise to many people. You read so much these days about seemingly easy ways out of debt, but the truth is there aren’t any.
Going “chapter 11” in any way has its distinct drawbacks whilst anything – anything at all – you ever read that suggests making money is easy, or getting out of debt is easy, is simply not to be believed.
The only ways out of debt are through a legal bankruptcy process that you really don’t want to embark on if you can possibly help it, or by sheer good fortune, or by selling assets if you have any to sell – or by steadily spending less than you earn including all interest payments on personal loans, for example, and other outgoings of any kind whatsoever. And for most of us, the latter option is the only realistic one.
So this calls for a reality check. You need to budget everything you spend each month, then build in a little wiggle room for unforeseen eventualities – then make sure you stay within that budget.
And you need to be realistic about it, too. This means documenting and recording everything you spend money on, even the pennies here and there. You then need to make sure you live beneath your means until your debt is cleared and you start to move towards a position where your capital is actually contributing to your livelihood rather than taking away from it – through interest payments or dividends etc. It’s a step by step approach and it usually takes a long time, depending on the level of debt you’re already in before you start, of course.
Anyone who suggests this is anything other than a hard slog is very probably being less than truthful. But the good news is that it can be fun, in a strange sort of way, as you begin to play it like a game and maybe even become a little obsessed by it all in a financially healthy way.