“I would suggest that far from being un-American, putting the brakes on your spending impulses and shucking off as much debt as you possibly can is the best thing you can do for your country.”
-“Dealin’ with the Devil”
-“Dealin’ with the Devil”
AS A YOUNG BOY, I was very involved in the Boy Scouts program. Each summer I looked forward to going to scout camp where I would work on merit badges and spend time camping out with my buddies. The week was one of the highlights of my summer. For a bunch of kids, the best part of scout camp was going to the rifle range to shoot guns. We would always pick the campsite nearest the rifle range because we knew we would be spending lots of time there and didn’t want to have to walk far to get there.
The first part of the rifle and shotgun merit badge involved learning about gun safety and the proper way to handle and clean a gun. After we covered those important topics, we went right out to the range to begin target practice. To get our merit badge, we had to hit the target five times—with all five shots being in a grouping that could be covered by a quarter. We had to accomplish that feat several times during the week to pass off that part of the merit badge requirements.
My first year at scout camp, I discovered I was a pretty good shot, so it didn’t take me too long to get my rifle targets passed off. That was a great accomplishment for a 12-year-old scout, and I was quite proud of myself. The second part of the merit badge required shooting clay pigeons with a shotgun.
Shooting a shotgun was a whole different experience. Not only were the shotguns heavier than the .22 rifles we used for rifle target practice, but they also carried quite a bit more kick. It didn’t take long for me to develop a very sore shoulder. But that wasn’t the toughest part.
To pass off this requirement, we had to hit a little clay disk (the pigeon), which was thrown out in front of us with a launcher. Waiting to take my first shot, I was full of confidence, having just aced the rifle requirement at the range. After the first few attempts with the shotgun, though, my confidence was shattered. While it was easy to hit a stationary target with a rifle, it was a whole different story to hit a moving target with a shotgun. Sure, the pellets in a shotgun shell increase the chances for success. But hitting one of those darned pigeons was pretty challenging, and I had emptied an entire box of shells and still hadn’t hit the required number. Fortunately, by the end of the week, I had finally hit enough clay pigeons to earn my rifle and shotgun merit badge.
So what does this little story about a 12-year-old Boy Scout have to do with debt? Before we can eliminate your debt, we have to get it to stop moving. As I learned that first day with a shotgun, it’s very hard to hit a moving target. So this first step in your journey to a debt-free and wealthy life begins by ceasing to add another dime of debt to your current financial situation.
This is an easy step to explain, but it’s a tough one for many to master. You’ve been conditioned to getting what you want—when you want it—for so long that the cycle you’re in has become second nature. You know what your credit limits are better than most people know their checking account balances. And you’re planning your next credit purchase the minute the next payment increases your available balance.
It may take great will power, but you have to stop adding debt immediately. Here are my suggestions for helping you get over this critical first hurdle.
CUT UP YOUR CREDIT CARDS
Credit cards are the very culprits that likely got you into this unpleasant predicament in the first place. This is the first and most important step, if you really want to get out of debt. If you’re feeling hesitant, consider that if you were trying to overcome an addiction to alcohol or drugs, you would never consider carrying a bottle of booze or a few pills in your pocket, would you? You haven’t been able to control your credit spending thus far, so what makes you think you can do it now? Will power? That’s not good enough. You have to remove all temptation to adding additional debt—starting today.
The only sure way to keep you from making your current situation worse is to destroy your cards completely. Stop reading right now and reach into your wallet or purse and get out all your charge cards. Now get a pair of scissors, or if you have a shredder with a slot for plastic cards, go sit in front of it. I can assure you there is no sweeter sound than a shredder chewing a credit card to bits.
Now some of you may argue that you need a credit card for business expenses, like reserving a hotel or purchasing an airline ticket. If that’s the case, you may want to keep just one card. Keep the lowest interest card, and destroy all the others.
But, if you need to keep one card, it’s critical that you don’t keep it on your person. If you don’t have the card with you, it’s easier not to use it. So, destroy all but your lowest interest credit card; or, better yet, destroy all your credit cards and keep only a debit card that will not allow you to charge more than you have in your account. The only reason to keep one card is to cover you in the event of an emergency until you have a reasonable, cash-based emergency fund established.
The challenge with keeping one card is determining what constitutes an emergency. Not having anything to wear to church or work is not an emergency. Cable television is not an emergency. Hanna Montana concert tickets are not an emergency. A country club membership is not an emergency. New carpet for the family room is not an emergency. I think you get the idea. If you can’t trust yourself to tell the difference (and act accordingly), just cut that last card up as well. When you have no alternative but to succeed, you’re more likely to do it.
There are very few situations, even emergencies, which would require you to pull out your credit card on the spot and use it. So, keep the one at home in a safe place, and you won’t be tempted to use it when your emotions take over and tell you that you just need to make one more purchase.
Have you ever been so mad at your kids that you considered physical harm? What is it about kids that bring out those emotions in us parents? When I reach the boiling point, I find it’s best to take a time-out to gather my emotions before I make a mistake. By leaving your charge card at home, you’re all but forced to take a time-out before you make a mistake and add more debt to your current situation. Hopefully, when you’re out of the range of that temptation to charge, you’ll realize it’s not a good idea and just leave the card where you put it.
The only way this step works is to do it cold turkey. Don’t just put all your cards in your desk and think you’ve followed this step. They must be destroyed and unusable. Why tempt yourself to break this rule? You’d never consider putting a fix in front of a recovering addict, so just destroy your cards to avoid any potential for temptation.
AVOID MAKING ANY NEW MAJOR PURCHASES
Getting out of debt takes planning and patience. There may very well be something that needs replacing in your home, but you need to resist the temptation to get it now. Try to make do for a while longer. If you need to replace something, look first for something used. Check with a friend or family member to see if you can borrow the thing you need or get one from them. Just try to avoid going to the store to look at new ones. If you do, the emotions will take over, and you’ll find yourself taking a step back. No new major purchases!
The best way to get out of debt fast is to focus all your resources on your debts without any distractions. It’s like putting on a full-court press in basketball. If you don’t keep the pressure on your debts, they will get away from you for a breakaway layup, and all the pain and stress you feel right now will return.
PAY IN CASH OR WITH A DEBIT CARD
Have you ever wondered why casinos use plastic chips rather than just letting you play with real money? It’s because the plastic chips help you forget that you’re losing real money. There is something powerful about seeing real dollars leave your control and go into someone else’s control. You just don’t get the same feeling when it’s a colored piece of plastic with a number on it.
There is something powerful about paying with cash when you make a necessary purchase. I suggest that you leave your checkbook at home and carry cash to pay for your basic, required purchases, like gas and groceries. The checkbook and credit cards are the tools you used to create your money problems. Don’t let them make the problems worse. When the cash runs out, you can’t spend any more money until the next paycheck. You’ll learn pretty quickly to distinguish between wants and needs when you’re holding that last $20, and it’s a week until payday.
BUILD YOUR SUPPORT TEAM
You’re going to have some rough days when you start dealing with your debt problems. It’s a huge help to let those around you, specifically your family and close friends, know that you’re working to change your financial future and get out of debt—and that you need their support. If they know you’re committed to your new plan, they are more likely to offer support and encouragement to keep you on track, rather than encouraging the behavior that got you into trouble in the first place. Who knows, they may have a debt problem of their own, and you can work together to provide support. It’s great to have a buddy system when it comes to getting out of debt.
Most of my close friends growing up knew I didn’t drink or smoke. Even so, I was put into many situations where I was tempted to try those things. I was always amazed at how many times my friends who did drink and smoke suggested that we leave the party or go somewhere else to protect me from the things they knew I didn’t do. If your friends and family members know what you’re trying to accomplish, they can be a tremendous source of support in helping you stick to your plan.
Often, people who are in serious financial trouble have a close friend or family member who is equally weak when it comes to overcoming their habit of spending money they don’t have. If you have a friend or family member who encourages you to spend money you don’t have or makes you feel guilty for not joining them in spending money, you need to put some distance between them and you. Never underestimate the power of peer pressure. There are many teens suffering with addictions or unwanted pregnancies because they fell prey to peer pressure. You don’t have to be a teenager to feel peer pressure. It’s just as powerful an influence on an adult. Choose your friends wisely if you want to stay on track.
Here’s another huge revelation. You’re more likely to purchase and charge stuff you don’t need and can’t afford when you’re alone. So one of the best tips is to surround yourself with trusted friends and family. Avoid being by yourself when you’re likely to start feeling lonely and sorry for yourself. That’s when your resolve is the weakest and you’re most likely to slip. It’s harder to break this rule when you’re with someone who knows you’re trying to get out of debt and wants to help you.
AVOID TEMPTATIONS TO CHARGE OR SPEND, EXCEPT FOR BASIC NEEDS
In order to get back on track, you need to have a clear focus on what’s most important and cut out all the financial distractions in your life. There are really just five universal primary spending categories that everyone has.
Everyone has these expenses, and they will likely never go away. Of course, there are a wide range of choices you can make on how you spend your money on these five primary expenses. Do you really need to drive a new BMW, or could you get where you need to go just as well—and for less money—in a used Toyota? Do you really need a house with four bedrooms when there are only 3 members of your family (and two of you share a bed)? Do you have to have the latest name-brand fashions, or can you live with being clean and neat in last year’s styles, purchased at a huge discount?
When you’re focused on getting out of debt, you’ll begin to look at these basic necessities in a very different perspective. If you’re like most people, you’ll quickly see that many of the spending choices you make in these primary areas are more a lifestyle choice than a necessity. A candid, honest appraisal of your spending in these five key areas is likely to identify several potentially large savings that can accelerate your progress toward your goal of freedom from debt.
The most common stumbling block for nearly everyone is putting their pride in their pocket and admitting they can’t afford the lifestyle they currently have—and then having the courage and commitment to take action to “right-size” their financial life. If there were a “secret sauce” to debt elimination, that would be it. The courage to change when it means sacrificing something we enjoy.
Outside of these five categories, everything else you spend money on is discretionary, meaning you make a choice to spend it or not. In order to get out of debt, you’re going to have to redefine what is necessary and then choose not to spend money on things that are not necessary. You may think I’m pushing the limits here and not being realistic, but, admit it, things like cell phones, magazine subscriptions, eating out, going to movies, gym memberships, and snack foods are all things we could do without if we really wanted or needed to. You may think a life without those little extras would be a living hell, but I can assure you that a Spartan lifestyle is much less stressful and more fulfilling than living with the burden of debt and all the challenges that come with it.
So here’s your first big choice. Do you want to make the sacrifices in the short term to have the life you dream of over the long term? If the answer is yes, congratulations! You’re now ready to tackle the remaining steps in my simple plan. I promise your life is about to change for the better, if you follow this powerful plan.
I tell my kids that if they want to avoid the temptation of drinking and drugs, they need to stay away from places where there is a high probability they will encounter them. They also need to choose their friends wisely and not associate with people who use those things. The same lesson applies to you and your addiction to debt. If your weakness is new clothes, you’re going to have to avoid the mall. Checking out the new styles at your favorite store—or online—is not going to make you stronger. In fact, it’s more likely to bring out those emotions you’re trying to overcome and lead to binge spending. Until you get your emotions in control, you need to avoid any situation that might make it easy to spend money you don’t have. Idle time is your worst enemy. Keep yourself busy and away from any potential temptations to charge or spend.
Once you have stopped adding new debt to your situation, you have a stationary target that you can zero in on and eliminate. Just remember, it’s almost impossible to hit a moving target when it comes to getting out of debt.