Passive Income

When I began studying personal finance and money management, the first thing I wanted to learn was how to become debt free. I had over $20,000 in consumer and student loan debt and could truly feel the weight that this burden was placing on my life. Like too many Americans, I choose to ignore my problems until I could bear it no more. Recently, a friend confided in me that he wanted to get out of debt, but he did not really know where to start.

If you really want to become debt free, the first thing you need to do is stop incurring new debt. After working my “debt free plan” for a few months now, this step seems pretty obvious. Apparently it is not! In order to actually begin chipping away at your balances, you must stop using credit.

“But what about emergencies”, I hear you asking. If you want this to work, then you need to re-define necessity. What I mean by that is you must decide what constitutes a “real” emergency before you begin. It is completely a personal choice that truly depends on what you value most. For me, having no consumer debt holding me back is much more important than chicken wings and beer with my buddies after softball. I define an emergency as something that must be addressed (paid for) immediately or I will lose my house, have my electricity cut off, starve my family, endanger my (or my family’s ) health, or not be able to get to work. Almost anything else can wait until I have the cash to pay for the emergency (or should I say unplanned event).

Believe me, learning how to become debt free is extremely challenging. You must visualize what your life will be like once you have achieved this goal. The truth is that you can do this but you have to start somewhere. I suggest you start by not incurring any new debt; then you can begin to deal with the debt that you already have.

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