Is debt nibbling at your heels? Welcome
to the club. Whether it's credit card, a mortgage, a loaner
for lunch, or a plane ticket home, most everyone has a debt
or two they need to repay.
As a nation, we're charged up, maxed out, and
otherwise treading water with five-pound weights velcroed to
The truth is, it doesn't take much to start
sinking in the first place. Consider two simple examples, starting
with a positive one.
Let's say you begin setting aside $75 every
month in savings, earning 5% interest. If you can pull this
off for five years, you'll end up with a comforting $5,100 in
Now, let's turn this picture on its head and
assume you come up short by the same $75 per month, on average,
over the same five years. Further, assume you routinely patch
over this difference with a credit card. Note that we're talking
about less than $20 per week here -- hardly a symptom of reckless
"retail therapy." Nonetheless, at the end of five
years, you'll be looking at more than $7,200 in debt, assuming
an 18% credit card interest rate.
That's an extra $2,100 in debt, beyond the $5,100
earned by saving $75 per month. This is the difference between
saving and paying down debt. Saving is hard enough, but paying
down debt is $2,100 harder!
EZ solutions for getting out of debt!
Lenders have made it too easy to get in a pinch.
And a lot of folks claim that their product or service makes
it easy to get out of the vice grip of debt. They've got one
thing right: Getting out of debt and staying out of debt is
actually pretty simple, at least compared to most money management
topics. It boils down to spending less than you make, on a consistent,
long-term basis. That's it. Nothing else will get the job done.
Nothing. And it's easy, too. Right? Wrong!
While conquering debt won't send you scrambling
for thick math textbooks, it's an ocean away from easy. One
moment of weakness -- or worse, one cruel act of fate -- and
you're scratching and clawing your way back out of the hole.
It's not easy. Take the first step.