a couple of years ago I put myself in a real ditch (for me) about 40,000 dollars deep. At first I didn't think of it much, said I'm young and will pay it off in a short period of time. Once I started making monthly payments with interest and harldy saw the balance come down, the reality hit home.
I realized how messed up of a situation I was in, it was this weight on my chest. Zero savings, and all this debt, it sucked. First thing I did was lower my expenditures. Basically asked myself before buying something, do I "need" this or do I "want" this? If it was a need, I bought it, if it was a want, I just said I'll think about it.
Second thing, I transfered my debt to the lowest paying interest source possible. There was a transaction fee but it was worth it. I also made sure I start a savings account. So everytime I made a payment towards my debt, I put a small chunk into my savings account. Debt kept coming down, and saving account kept growing.
And the money I spend, I do it through creditcards that pay you cash back bonuses. Basically 1% of the amount you spend. But the trick is to pay off the entire balance at the end of the month, which I do. Otherwise you'll be paying a much higher than 1% interest rate. What that does is after three or four months I get like 50 or 60 bucks in rewards which I use for statement balance.
After 5 years of hard work, it paid off. Now as a father of two girls I'm way more cautious about what I spend and where I spend it, unlike before. I still buy some "want" only things here and there but not all the time. I have a substantial savings and a 401k account (which however keeps taking a hit due to the economy).
I still have some debt but that's cuz I bought property in Pakistan. That I consider good debt cuz it's already almost doubled in value. Unlike bad debt, like say buying a car, which only depreciates in value, like I had before.
I realized how messed up of a situation I was in, it was this weight on my chest. Zero savings, and all this debt, it sucked. First thing I did was lower my expenditures. Basically asked myself before buying something, do I "need" this or do I "want" this? If it was a need, I bought it, if it was a want, I just said I'll think about it.
Second thing, I transfered my debt to the lowest paying interest source possible. There was a transaction fee but it was worth it. I also made sure I start a savings account. So everytime I made a payment towards my debt, I put a small chunk into my savings account. Debt kept coming down, and saving account kept growing.
And the money I spend, I do it through creditcards that pay you cash back bonuses. Basically 1% of the amount you spend. But the trick is to pay off the entire balance at the end of the month, which I do. Otherwise you'll be paying a much higher than 1% interest rate. What that does is after three or four months I get like 50 or 60 bucks in rewards which I use for statement balance.
After 5 years of hard work, it paid off. Now as a father of two girls I'm way more cautious about what I spend and where I spend it, unlike before. I still buy some "want" only things here and there but not all the time. I have a substantial savings and a 401k account (which however keeps taking a hit due to the economy).
I still have some debt but that's cuz I bought property in Pakistan. That I consider good debt cuz it's already almost doubled in value. Unlike bad debt, like say buying a car, which only depreciates in value, like I had before.
