Get Out of Debt

1. Be honest about how much debt you have. 

Do you know exactly how much debt you have? That is the first step. Some people may say that they don't have much debt, but when they add it up, they are crushed under the weight of credit cards, car and boat payments, revolving accounts, etc., all of which are keeping them from moving forward financially. The key is to know where you are so you can develop a plan on how to get where you want to be.

2. Live simply.

Ralph Waldo Emerson said, "The true measure of a man's wealth is in the things he can afford not to buy." Great wisdom there. Just because you have the money does not mean that you have to spend it. Most families, when they get raises in their incomes, just raise their expenditures along with that income, and they do not get ahead. If you really want to delve into the topic of simplicity, I would highly recommend the classic book, Walden, by Henry David Thoreau. It will challenge your thinking on simplicity.

3. Keeping up with the Joneses. 

Along the same line as the last thought, many people get caught up in debt because they are making purchases not because they need what they buy, but because they are simply trying to "keep up." This is a deadly treadmill to get on and is very difficult to remove yourself from. The key here is to make sure that you are making your purchases based on good rational thought based on what you need, what you desire and can afford - not just to look good for the neighbors!

4. No freedom with debt. 

There is absolutely no freedom in debt. It places you in bondage. When we have debt, we answer to someone else—a bank or store, for example. They have rights to our future income. That creates stress and emotional turmoil, especially if the debt amount grows and becomes too much to bear. Do yourself an emotional favor and stay free of debt.

5. Debt is the opposite of investment. 

When we invest, our money is placed somewhere else and we receive interest. When we are finished, our wealth has grown. When we take on debt, we borrow from someone else, pay interest and our wealth is diminished. To make our wealth grow we must get on the wealth-building cycle as soon as possible and stay away from the wealth-eroding cycle of debt.

6. Debt is a matter of self-control. 

Ultimately, whether we take on debt or not is a matter of self-control. Eisenhower said that the history of free men is not written by chance but by choice. And that is true. When we look back and write our history—including our wealth and debt history—we will find that where we end up is a product of our choices and a tangible view of our levels of self-control. Consider this: When you stand in front of that product that you want to buy but cannot afford, you have a choice. You can choose self-control and decide to save up and pay cash for the purchase, or you can choose to purchase the product on credit—creating a debt—and most likely pay up to 20 percent more for the product. That interest you pay is the price you pay for a lack of self-control. If you want to be debt-free, then one of the best things you can do is bolster your self-control.

7. Keep your budget.

We discussed how planning, decisions and priorities are vital to a successful budget. This is extremely important in eliminating debt. Your debt is directly affected by:

The planning you do before you earn and spend

The spending decisions you make

Your priorities and how well you stick to them. 

8. Delayed gratification.

Lastly, staying out of debt can be greatly helped by learning this great lesson of life: Delay your gratification. Too many people want everything "right now" and they are willing to go into debt and risk their financial future to do so. The fact of the matter is that if we delay our gratification now and invest the money into something that will help our wealth grow, then we will certainly be able to afford what we want down the road. And the good news is that at that time we are able to pay cash, and still have some more money left over.