Debt Proof Living

The chapter in my book dedicated to debt, at least at the beginning, is heavily influenced by Mary Hunt, because her excellent book ‘Debt Proof Living’ has such a wealth of good advice.

She talks about the ‘Principles for Debt Proof Living’ and I have tried to distil the essence here and put my own spin on it, but I would recommend you visit her website and you must buy and read her book too.

1. You must never keep it all (we have talked about tithing already)
2. You must never spend it all (this is the “pay yourself first” concept)
3. There are only five things you can do with money. Give it, save it, invest it, lend it and spend it. Notice where ‘spend it’ comes in that list. Last.
   
4. Accept that someone or something else is the source of your talents, intelligence, abilities and creativity. Your unique responsibility is to be a good steward of all that you receive and to use it to the max. Who are you not to shine? How can you shine when you are dulled by worry about debt?
5. What you receive is what you deserve. A rather controversial statement really, but when you think about it, why would you deserve more if you can’t learn to do the best with what you have?
6. Mary Hunt says Always Pay Cash. I’m not sure I totally agree with her here, because it is too easy to lose track of your expenditure if you pay cash. I prefer to think of my clients as grown ups and it’s better to learn how to handle the various tools like credit cards, switch cards and bank accounts, than not.
7. No (stupid or bad) debt no matter what. Nuff said.
8. Develop a strategy/plan for your financial life. This is so important and so many people don’t do it. You need to write out your short, medium and long term objectives and then look at each and decide what actions will best serve your objectives. Then go and do it.
9. More money is not the answer. The more you have, the more you will spend and if you have to earn it then the harder you will have to work.
10. Pay in full now or pay twice later. Or even three times. And how profoundly depressing to think that you may still be paying for something that you don’t even have the pleasure of using anymore.

Living without debt is like a tax–free increase in income. Do you remember the younger Nicola in earlier chapters staring at her salary slip and willing the net amount payable to grow?

Well, if you can liberate the amount you pay to your loans and credit cards every month, then it is like giving yourself a tax free pay rise.

Powerful stuff Mary!

DEBT BUSTING ACTION STEP

What are the next steps?

Okay, so now you know how many debts you have and how much you have left to pay off. You have resolved not to incur any more consumer debt. If you want to buy something, you will find out what it would cost to buy it on credit per month, and then put that amount away until you can afford to buy the item outright.

Make a note of the total amount you are paying to service your debts at the moment, every month. Resolve that this is the amount you are going to pay every month, off one debt or another, until you have no more consumer debt left.

The good news is that it will make you feel better, because you know that, if you don’t incur any more consumer debt, then that amount will never go up and in fact, one day it will go down. Remember that this is like a tax free pay rise!

This extract was taken from the “Debt-Busting Chapter” of
Nicola’s book “The Money Gym : Wealth Building Workout”