A lot of people have debt. Car title loans and mortgages sap the strength of our nation. Our national debt now exceeds $19 trillion. This is approximately $60,000 for every resident of the country. This is a very heavy debt load. Personal debt is often even higher than public debt. If you are hoping to remove debt, we have collected some tips from the experts that will put you on the path to financial freedom.
- Debt Snowball – Financial expert Dave Ramsey recommends this to keep you motivated. The debt snowball involves removing the smallest debts first. If you owe money on groceries, car, and your home, you pay off the grocery bill first. After that, you tackle your car loan. Finally, you start cutting away at your mortgage. The debt snowball method may seem counter intuitive. After all, shouldn’t you deal with the biggest debt first? However, human nature likes rewards. If you remove some of your debt quickly, it will push you forward to get the bigger debts. Figure out all the things you owe. Get to work paying off the little ones, then the big ones.
- Be Unpopular – Debt often occurs because we have a deep urge to be popular. We see the fancy car, and we have to have it. We ignore the quality older car at the used lot next door. We see the beautiful house, and we have to have it. We ignore the much cheaper condo downtown. We see the cute spouse, and we have to marry them. We ignore their tendency to divorce us when the going gets tough. All popular things come with a high market price. You have to compete heavily to maintain your advantageous market position. The laws of economics say that if there is a scarce quantity of a popular good or service, the price for it will be very high. Ignore what the masses around you are craving. Turn off the major media outlets and their advertisements. Use common sense.
- Learn from Debt Free People – It might seem humiliating to ask for help, but the wisest always do. If your debt is far too high, enlist the services of a relative or finance guru who already has no debt. Your portfolio will benefit from their expertise. The freedom that comes from having no monthly bills is liberating. You will enjoy it. The momentary pleasure of getting exactly what you want now fades to the long term satisfaction of being in charge of your wallet. There are many who have walked the path of debt freedom before you. Some are probably your managers or friends. Maybe you do not like hanging out with them, because they are less friendly than you. That being said, surrounding yourself with different people will make you more effective.
- Know Your Comparative Advantage – Are you in the correct field? Many people pick a job because their parents or teachers recommended it. However, they might not be naturally suited for it. Find the market that desperately wants what you are naturally good at doing, and your debts will quickly dissolve. If you are in a market where there are a lot of people doing exactly what you are doing, your pay will be less. Why? Your competition will be high. A good example is a college student who is leaving a school with $70,000 in debt. He is going to be shackled with this for another couple of decades. If he understood economics, he would realize that the Chinese market has a much lower cost of living, and he could save half of his income there teaching English. The wisest adapt and suffer to find their natural market. The foolish compromise to survive in a competitive market. Be wise, and find the market that desperately wants what you are good at doing.