FINANCIAL FITNESS BOOT CAMP: WEEK 6

By now, you’ve had time to track your spending for ONE month and have identified patterns and trends in your spending habits. Are you spending too much money shopping for items you don’t need? What about dining out (like myself?) Going overboard on leisure activities and vacations? What about overindulging your children? Yourself? The list can go on and on. You know where your money is going because you’ve tracked it. If you’re serious about eliminating debt, you know EXACTLY what you need to do to get there. This post won’t be as lengthy as the others because you need time over this next week to THINK and DECIDE if you’re ready…

STEP 6: IT’S TIME TO GET OFF THE MERRY GO ROUND… OF DEBT

A MERRY-GO-ROUND is defined as:

1. A revolving machine with model horses or other animals on which people ride for amusement.

2. A large revolving device in a playground, for children to ride on.

BUT FOR THOSE WHO WANT TO BECOME “FINANCIALLY FIT” THE MERRY-GO-ROUND OF DEBT IS…..

3. A continuous cycle of activities or events, especially when perceived as having no purpose or producing no result.

For some of us, debt is similar to a merry-go-round, especially when we take no steps to eliminate it. Doing so, is a continuous cycle, having no purpose and produces no result. For example, the minimum amount you pay each month on your credit

card(s) DOES NOT get you any closer to paying off the credit card balance in a reasonable period of time. Credit card statements now show how long it would take to pay off a credit card balance making minimum payments (and of course making no future charges.) Have you stopped to read it? For some it may take up to 30 years to pay a balance. THIRTY YEARS!!! What if you’re only 30 years old? Oh, Perish the thought. “But I pay on time and I have good credit,” is what some of you may be thinking. Paying the minimum amount due on time shows you are responsible at handling credit, but your debt-to-income ratio can still be through the roof labeling you a possible “credit risk.” Although creditors see you making timely payments each month, they may be hesitant to extend additional credit to you, or in some cases may charge you higher interest rates, or require higher down payments to do so.

Debt, or credit card debt in general is a vicious cycle that some of us see no end to. Many have the belief that debt is a part of life. SAYS WHO? Eliminating credit card debt is the first thing I’d like to tackle, but BEFORE we start tackling credit card debt, it would be wise to set up an emergency savings account. To do so, you have to be willing to “get off the merry go round.” GIVE THOSE CREDIT CARDS UP!!!! Remove them ALL from your wallet or pocketbook and only carry one (with the lowest credit limit) in case of emergencies ONLY.

Now how does “Getting Off the Merry-Go-Round” relate to the tracking of my spending habits and credit card debt?

YOU’VE GOT TO EXERCISE DISCIPLINE AND BE WILLING TO LET SOME THINGS GO. This means scaling back on the spending of non-essential items. Look at your what you’ve spent your money on in the past month and determine what can be modified or stricken completely from your spending in order to free up additional money so you can pay not only the minimum amount due on your credit cards, but a “little extra.” I’ll talk more about how I tackled credit card debt (in excess of $20K) in next week’s FINANCIAL FITNESS BOOT CAMP post… AND IT AINT PRETTY!!! In the meantime, let’s start working on how to build up that EMERGENCY FUND. Look for PART 2 of this post later this week.

Old habits die hard, but the reward from discipline far outweighs the cost to reach your goal. So are you IN or OUT? Will you remain shackled by debt, or break the chains to gain financial freedom? The decision is up to you.

I hope you benefitted from this posting and I do appreciate you reading it.Your commentary is always important so ALL FEEDBACK IS WELCOMED. If there is a specific topic you’d like me to talk about regarding “Financial Fitness Boot Camp” on this blog, feel free to shoot me an email at Andrea.Coleman@TheFinancialHack.com. Don’t miss a posting so be sure to follow me at http://www.thefinancialhack.com.

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