Getting Out of Debt IS Prepping – How to Start

If you have read my previous financial article “The Seeds of Financial Preparedness” you already know that most seemingly valid excuses for not getting out of debt in are invalid. Before you get all the cool gear, you need to be financially prepared FIRST.

Americans have grown up on credit, it has been a way of life for us to always be in debt, it is completely socially acceptable and the banks LOVE it. This is opposite of what preppers strive for. The number one priority in your preparedness plan should be to get out of debt (see  The Five Principles of Preparedness), and shed the most wasteful thing almost all of us do, make credit card payments and loan payments. This will benefit you many ways, but the one benefit you will see right off the bat is that it will free up the cash you need to be prepared to face any challenges you have in your future.

After working in the financial industry for seven years I can confidently say that paying off your debt is not impossible, even if you don’t make a lot of money and are barely making ends meet now, its doable. Paying off your debt takes discipline for anyone, but being debt free means you are less vulnerable – it means the banks and lenders can’t hurt you, they no longer have any control over you or your life. Who cares if your credit score sucks, if you don’t need a loan!? You see? They can’t affect your life style if you are not a slave to their system. Every single prepper should be striving for this. And just incase you are wondering – it is, in fact COMPLETELY possible to function in today’s society without credit cards and debt, we’ve just forgotten how…

To begin this journey I advocate doing it yourself. There is very little a debt reduction agency can do for you that you can’t do yourself, and some debt reduction agencies are a scam that will only get you locked into another loan ultimately only benefiting them. Also I do NOT recommend that anyone use a refinance on his or her home mortgage to consolidate debt, of course your bank will, but I do NOT. I will go into this further in future articles it’s really not a good idea. Start off by making two immediate changes in your lifestyle today. Don’t wait till it’s a better time to talk to wife or hubby, do it today.

Step 1: Couples – Become One

Get your significant other on board with the household money. If you are married, there is no excuse for laying the “money end of things” on one person, both of you need to be equally involved – as the preacher said, “…you are both now ONE”. This means there is no “my savings account” and “your savings account” or “your credit card debt” and “my card debt.” Because you are one, it is OUR savings and OUR debt that “WE” need to work on together to pay it off.

Living separate lives via your bank accounts does not help your marriage or your money, that’s why its important to put it all on the table – sit down tonight and get out all of your bills (balances and payments) and write them down. This can be difficult when one person carries a significantly larger debt load than the other, but the sooner you both start working together to pay it off the sooner it will no longer be a thorn in your relationship.

Each of you should have an equal say, even if there is only person earning a paycheck. If you both don’t agree on something then you don’t buy it. With each person having a ‘veto’ so to speak it will not take long for you both learn that playing fair goes a lot further than playing dirty. If there isn’t participation by both parties in getting out of debt it most likely won’t work, its vitally important that you get your partner on board.

Step 2: Create AND Live Within a Monthly Budget

Writing out a budget is nothing but a waste of time if you don’t live by it. Create a monthly budget and start living within your paycheck today, this means no busting out the credit card if you are too short to pick up something from the store. If you didn’t write it down on the budget at the beginning of the month then you are out of luck. Use the information you gathered from getting your bills out from the above step, and log into your home banking (or get out your check book) so that you both see exactly what you’ve been spending money on each month; plan and or cut back accordingly. This needs to be done every single month. One budget does not apply to every month. You need to set it up each month, and make it a routine. I can assure this will only be painful the first couple of times you do it. I am not going to lie to you and say it’s going to be easy, but I can honestly tell you that if you give it four months you will grow to enjoy the process and the open communication that it brings, and it will become a habit.

Make sure you prioritize your monthly budget so that your debts are paid first with your home mortgage taking priority over the rest, after all your home is your shelter. All of your bills and debts should be paid first before money is allotted for things like the kid’s karate lessons, cable TV, prepping gear, Netflix or the Internet. Remember paying off your debt IS PREPPING, so you are not shortchanging yourself by prioritizing your money in that way. Try to over budget your groceries if you can, most people under budget this category and put themselves in a position where they have to stray from their budget right off the bat.

In future articles I will go into budgeting in more detail and address specific debt situations. In the meanwhile here are some links where you can learn a little more about budgeting and paying off your debt. Don’t agree? Have a question? I will respond to any comments as soon as possible.

Other APN Financial Preparedness Articles:

Financial Preparedness – The Importance of a Monthly Budget

Getting Out of Debt IS Prepping

The Seeds of Financial Preparedness

Articles on Budgeting:

http://www.daveramsey.com/articles/article-list/category/lifeandmoney%5Fbudgeting/

Free Work Sheets for Setting up Your Budget:

http://www.daveramsey.com/tools/budget-forms/

Dave Ramsey’s Program:

http://www.daveramsey.com/new/baby-steps/

I fully endorse Dave Ramsey’s program to financial peace. After seeing the ins and outs of the financial industry for 7 years I can vouch for its effectiveness – and for Dave’s wisdom. While not a prepper himself, Dave’s program is right in line with the principles and values of preparedness.

This series of articles are presented from my point of view with 7 years of financial industry experience. They are, in a sense, my opinion and should not be viewed and legal or financial advice. My solutions do not fit every issue, so I highly recommend anyone facing money troubles should seek a qualified financial advisor or counselor before acting. Again, Dave Ramsey’s team of financial coaches is the only place I personally would seek out such help for myself.