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The Six Biggest Lessons I Learned While Paying Off My Debt

Paying off debt lessons

This is a post from Richard at Frugality Magazine. Enjoy! Just before Christmas last year I reached the point of having paid off all my consumer debt – a situation that seemed insurmountable just a few short years before. When I finally accepted by debt problem – something that took far longer than it should have done – and decided I needed to shift the weight of growing interest and spending every available penny on repayments I examined every available option. What about debt consolidation? Or an IVA? Or even bankruptcy? I just couldn’t see a way that I was going to pay off the mountain of money that I owed while keeping up with even my most basic of living expenses. But you know what? After some serious consideration I opted to avoid all these potential “short cuts”. I just decided to knuckle down, become more frugal, cut my living expenses and pile the extra cash into my debt. In other words I did it the plain old boring way. The *reason* was simple – my debt was painful but I wanted to fully meet all the agreements I’d made with my creditors (a moral argument) and I also ...

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“Smart” Ideas That Can Keep You From Paying Off Debt

keeping you in debt

It’s hard to know when to spend money in the midst of paying off debt. You do have to buy necessities, and sometimes you need a little splurge to keep you motivated. In this world of uber-consumerism, there is always someone who can convince you that just about anything you want to buy  is a good idea. Don’t detour from your debt repayment plan with one of these three seemingly “smart” ways to spend money. Sales Nothing can sabotage your debt repayment plan like sales. I bet most of us have had this experience, either in stores or online. You see some sort of sign or banner ad offering x% off something, say it’s 25% off shoes. You think to yourself, “Hmm, I wear shoes. Maybe I’ll just take a look. I’m certainly not buying anything.” The next thing you know, you have three new pairs of shoes. One of them is kind of a weird color, but it was a brand you love and came with an extra discount. Twelve months later, you sell that pair of shoes on Ebay for 1/10 of what you paid for it. It really wasn’t your color. As we were racking up credit ...

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Would You Sell Your House If It Meant Debt Freedom?

Selling a house

I swear being middle aged has sent me into considering all sorts of financial schemes to pay off debt and become financially independent. First, we were going to try and pay off our house within 5 years. Then, I felt an urge to sell everything and live in an Airstream trailer. Those ideas were probably a little ambitious or just plain nuts, but I can’t shake the seed of an idea that has grown into a real possibility as the housing market is starting to pick up where we live. We could actually sell our house and make enough money to pay off one of our rentals and buy a smaller home outright, which pretty much means debt freedom forever. Being the financial blogger that I am, any big decision needs a list of pros and cons, so here we go. Yes, You Should Sell That House! -We owe about $150,000 on our home mortgage. Our house appraised for $375,000 a couple of years ago.  With sales in the area, we could get our appraisal price, but to be conservative, I’d say that we could count on $350,000. That leaves $200,000 in tax free profit! We could pay off our ...

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Mistakes That Keep People in Debt

Money mistakes

I have certainly made my share of financial mistakes from running up credit card debt to spending student loan money on an iguana, but I think after all those mistakes, I’ve finally learned how to stay out of debt. However, I see people every day who are still struggling with the same money problems we used to. There are some key mistakes that can sneak upon anyone trying to beat the cycle of debt. Taking Out Loans After Paying Off Large Amounts of Debt We knew another family that were going through some of the issues we were during our massive credit card debt payoff. We used to all hang out and play musical credit cards, charging whatever and whenever we liked. Jim and I had our wake up call after seeing family really struggle after losing a house to foreclosure. Our friends lost a job during the great recession. The husband worked in a sales job while the wife stayed home with the kids. Since they had no emergency fund, things got pretty tight. Eventually, they made some tough decisions, which included selling a really nice house that was keeping them house poor. They moved into a small rental. ...

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One Year After Paying Off Credit Card Debt

We’ve had so much going on for the last couple of months that I actually forgot our one year anniversary of freedom from credit card debt. We paid off the last of our $30,000 credit card balance in  on November 27, 2012 and haven’t looked back. In past years, we were able to pay off credit cards, but ran them back up within a few months. What happend this time that kept us out of debt? You Can’t Stay Out of Debt if You Don’t Have Goals We never stayed out of debt in the past because paying off Visa and Mastercard meant lots of available credit to buy more things. We didn’t have a purpose for our money. To keep free from credit card debt, you have to know how much you make, how much you need to spend for necessities, and what your short and long term goals are. If you know what you want to do with your money outside of shopping to cure boredom, it’s easy to plan how to get there. When you don’t have a purpose for your money, it’s easy to spend it on silly things. Now I know exactly how much I ...

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