Gary North

You have now completed 11 lessons on how to reduce your personal debt. This should be regarded as the final lesson.

It is easy to begin a process, but it is difficult to complete it. With respect to debt, a process may take the rest of your life. You can get out of debt, but the difficulty of remaining out of debt for some people is almost overwhelming. It may not be so difficult as losing weight and keeping it off, but it is close. Some people really are addicted to debt, and the temptation of going back into debt remains with them all their lives.

I think most people who have read and applied the 11 lessons of this course are in a position to avoid returning to a life of debt. What I have presented is not simply a plan to get out of debt and stay out, but rather a lifestyle change that is more fundamental than the addiction to debt. The change that this program will effect in your life is your defense against debt. It is not simply a series of techniques that will enable you to get out of debt on a one-time basis. There are techniques, but far more important is the lifestyle change. You now have a new attitude toward debt, and you have begun to develop habits that will enable you to remain debt-free, assuming that you do not have some kind of unexpected disaster in your life that forces you to take on a great deal of debt.

It is a good idea to continue to budget on a regular basis. I think budgeting is the key to retaining good habits regarding the use of money. Use the use software on this site, or use Quicken or perhaps some other software program. It is imperative that you continue to budget on a regular basis. This should also include budgeting money to be set aside on a permanent thrift program.

I have not emphasized building up a savings program, because the interest rates you are paying on credit cards is so great that no amount of saving is going to save you from consuming your capital. You must get out of debt, because the interest payments are eating into your capital and your future. Only when you are out of debt, or almost out of debt, when the interest rate charges are not eating you up, does a savings program make much sense.

The basic savings program is an emergency bank fund that will help you from going into debt if an emergency strikes you. The other aspect of the thrift plan is to build up capital for expenses that you know are going to come, such as automobile repairs, other kinds of maintenance, and purchasing replacement goods when long-term durable goods finally wear out.

I do not believe that most people can use a thrift program that will build up sufficient equity to enable them to retire in comfort. The only way that I know to do this is through systematic real estate investing, which involves the use of mortgage debt. US never take this approach unless the real estate itself serves as collateral for the mortgage loan. Never sign a real estate contract in which the creditor has recourse to any part of your income or existing capital. A nonrecourse loan is a loan in which the property is 100% of the collateral. This is the only kind of real estate debt that you should ever consider.

I cover these issues in detail on my website, Until you are well on the way to being debt-free, you should not join that site. The monthly subscription fee is minimal, but when you are deeply in debt, you must be highly dedicated in avoiding all new expenditures. At some point, you probably will be ready to join the site, assuming that you want guidance on what to do with your money. But that time is not yet.

Your goal now should be to stick to the program that you have already begun. If there are any aspects of the program that I have outlined that you have not fully adopted, concentrate on those missing links. Get as much of my program implemented in your life as you possibly can, both financially and psychologically.

You have got to make a monthly review of your debt situation, which is why I recommend that you have a program online that will enable you to see the decline in what you owe, and which will also enable you to see where your money is going. You must become a fanatic in cutting expenses, and then using all of this save the money for debt reduction.

I believe that over the next three years, maximum, you will find yourself debt-free, except for your mortgage. If you have high student loans, this will not be possible. If you have a medical bill that is very high, you should probably try to negotiate with the hospital about what you owe. But, if you are a normal debtor, dealing with credit card debt for consumer items, you should be able to be out of debt within three years. You may even be able to get out of debt earlier. That should you be your primary goal until you are completely out of debt for consumer items.


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