Reduce credit card debt...it's like fat!
People who want to reduce credit card debt may want to think about it this way: it's like losing fat.
When you think about it, the comparison between obesity and too much debt just jumps out at you, doesn't it? Too much fat's bad for your health. So's too much credit card debt. You probably see this.
Now here's something new. Dr. Paul Uppot of Massachusetts General Hospital wrote a paper that demonstrates that too much fat prevents accurate readings on things like MRI's, cat-scans, even x-rays. You can't see through the fat!
Credit card debt acts the same way. When you try to diagnose your financial position, the credit acts like a layer of fat. It prevents you from seeing where you really stand.
Let's say you make $100,000 and own a $500,000 home with a $450,000 mortgage. You've also got $50,000 in credit card debt.
You're thinking you've got $50,000 of "equity" in your home. But your net worth is zero. That credit card debt wipes out your home equity.
You think you're earning a net income of $70,000 (after taxes on your $100,000). But you don't really. You owe about $10,000 a year in interest payments on the credit card debt. So your net income is really $10,000 less.
Just like fat, the debt distorts the way you look (your net worth) and slows you down (your reduced income).
Lose the debt and you'll see things clearly again.
Of course, it's easy to say "lose the debt" just like it's easy to say lose the weight. I've done both, so I now it's easy to say and not so easy to do. The hardest part is getting started.
With debt, you may think there's no way you can cut down on your spending. You'll find all sorts of things you don't spend your money on that someone else does and it'll seem like there's nothing for you to cut out. A good example is vacations. I always hear: "We don't take fancy vacations." Or, "We only go on one vacation a year." Another is restaurants: "We hardly ever eat out." As you can imagine, the list gets pretty long.
But there's always stuff you can cut out.
It's the same with eating. My clothes were tight and I thought: I don't eat that much. But it didn't matter. My clothes stayed tight. So I either had to buy new clothes or drop some pounds. Being the cheapskate that I am, I dropped the weight. It wasn't easy, but once I got going, it wasn't all that bad. (And, so far, I still fit into my clothes.)
So reduce credit card debt - by hook or by crook. Don't accept any excuses from yourself. Get going.
When you think about it, the comparison between obesity and too much debt just jumps out at you, doesn't it? Too much fat's bad for your health. So's too much credit card debt. You probably see this.
Now here's something new. Dr. Paul Uppot of Massachusetts General Hospital wrote a paper that demonstrates that too much fat prevents accurate readings on things like MRI's, cat-scans, even x-rays. You can't see through the fat!
Credit card debt acts the same way. When you try to diagnose your financial position, the credit acts like a layer of fat. It prevents you from seeing where you really stand.
Let's say you make $100,000 and own a $500,000 home with a $450,000 mortgage. You've also got $50,000 in credit card debt.
You're thinking you've got $50,000 of "equity" in your home. But your net worth is zero. That credit card debt wipes out your home equity.
You think you're earning a net income of $70,000 (after taxes on your $100,000). But you don't really. You owe about $10,000 a year in interest payments on the credit card debt. So your net income is really $10,000 less.
Just like fat, the debt distorts the way you look (your net worth) and slows you down (your reduced income).
Lose the debt and you'll see things clearly again.
Of course, it's easy to say "lose the debt" just like it's easy to say lose the weight. I've done both, so I now it's easy to say and not so easy to do. The hardest part is getting started.
With debt, you may think there's no way you can cut down on your spending. You'll find all sorts of things you don't spend your money on that someone else does and it'll seem like there's nothing for you to cut out. A good example is vacations. I always hear: "We don't take fancy vacations." Or, "We only go on one vacation a year." Another is restaurants: "We hardly ever eat out." As you can imagine, the list gets pretty long.
But there's always stuff you can cut out.
It's the same with eating. My clothes were tight and I thought: I don't eat that much. But it didn't matter. My clothes stayed tight. So I either had to buy new clothes or drop some pounds. Being the cheapskate that I am, I dropped the weight. It wasn't easy, but once I got going, it wasn't all that bad. (And, so far, I still fit into my clothes.)
So reduce credit card debt - by hook or by crook. Don't accept any excuses from yourself. Get going.
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