DEBT - How to Avoid, Get Out, and Stay Out

So many of us spend more than we earn each month. Our lifestyles are beyond our means. And we are in total, 100% denial of this fact. We are clueless and stupid. No disrespect intended.

How much money that is spent each month should be based upon income, not on what is wanted or desired or anything else that one's Id has a hankering for. We are humans and we are adults - we must rise above this lack of self-control.

It's time to grow up and be a responsible adult that makes smart decisions. Time to put on your big girl panties or big boy boxers!

First of all, destroy every single credit card and ship them back to the banks, asking that your accounts be closed immediately. Don't give me any whining or I'll get out the world's smallest violin and play "My Heart Bleeds For You."

You are allowed to have only one phone. If you have a cell phone, cancel your landline completely. Now contact your cell phone provider and get into the cheapest package you can. Get rid of texting. A call is cheaper than a text. Texting is for teenagers - it's like passing notes in class.

• Drop all memberships - the gym, the museum, clubs, everything!


• Stop paying people to do things you can do yourself - manicures, lawn mowing, cleaning service.


• Stop eating out at restaurants, clubs and bars, and going to movies, plays and concerts...at least for the next 2 months to see how able you are at meeting your "needs."

Now let's look at your income because that's our starting point for figuring out what you can spend.

What is your gross (before tax) income per month?

Figure out 10% and tag it for retirement. This can be a 401K, an IRA or savings account or combination of the three. Just make sure you are saving 10% every month for when you are old and gray. This is NOT vacation or fun money! You must put this much away every month or you will be living in a cardboard box and visiting soup kitchens during your golden years.

Figure out 25% and tag it for housing. This is the MAXIMUM that you should be spending to put a roof over your head. Homeowners should count mortages/equity loans. Renters need to count their rent. Add in any association fees. If this monthly amount is under 25% then do a happy dance because you'll need this extra cushion to help you out in the next step. If it is above the 25% limit, then refinance your mortgage or MOVE SOMEWHERE CHEAPER!

Figure out 35% and tag it for housing + long term loans. Use the money you figured out in the previous step and add to it: homeowner/renter insurance (calcuate a monthly average), private mortgage insurance (PMI), car payments, car insurance, student loans, personal loans, property taxes (figure out a monthly average).

If you are under the 35%, good for you! If you are over the 35% limit, then you need to reduce one of the variables: Move somewhere that doesn't have association fees or has lower property taxes. If your loan balance is 80% or less of the original loan amount, you can get out of the PMI by writing to the lien holder. Trade your car in for one that'll give you lower monthly payments and cheaper insurance or even go for a motorcycle. See about refinancing your student loans. Sometimes Bank of Dad comes in handy. Make up a contract that details monthly payments and penalties for late payments and be faithful in your payments! Never send in nothing. Always send something no matter how sad your excuse is. I don't want to see the two of you on Judge Judy!

Some people like to bring in room mates to help out with income. That's a nice idea but remember that room mates come and go. Those times between an old and new room mate are going to be tight. If there's a falling out or something unforseen comes, you may not receive that last month's rent or a 30 day notice. Don't put yourself in this position. It's a vulnerable place to be. Be a roomer rather than the main person on the lease.

Now on to the subject of food. In the beginning, allow yourself to eat out only once a month and it has to be somewhere cheap. It'll be painful, but you'll get used to it. I promise. One idea for you - dump your change into a jar at the end of every day. After the end of each month, however much change you have dictates how much you can spend eating out. Here's another idea - invite friends over. You treat to pizza (using your accumulated change), one friend brings drinks, another brings salad, and another brings dessert. Make it once a month get-together.

At home you need to buy the basic ingredients and make your own meals. No boxed, ready to cook meals. One of my pet peeves is boxed macaroni and cheese meals. OMG - it is so cheap to buy your own macaroni and use some Cheese Wiz or cubes from a block of cheese you cut up yourself.

Do not be brand loyal! Become a Benedict Arnold and hold your head up high! Use coupons but beware - some brands are still more expensive even with the coupon applied. Don't get tricked.

For fruits, get fresh or canned. You have your favorites so buy the one that's the cheapest per pound that week. Applesauce is cheaper than fresh apples per serving. If canned or jarred fruit goes on sale, buy a bunch of it.

Go frozen with veggies. Canned is high in salt has has a funny metallic taste. Frozen veggies are just as nutritious as fresh but cheaper. Again, compare your favorites and buy whichever one is the cheapest per pound. Get the size of bag that's the best price per pound. It's not always the largest bag.

Meat is a touchy subject. The cheapest meats are usually high in fat and bad for you. You don't want to be eating high fat meat every day! Try to get low fat, healthier cuts of meat but only eat meat three times a week. Figure on a quarter pound of meat (or less) per person. Avoid super size servings. On the other days, eat macaroni, spaghetti or soup. Soup is real cheap.

Forget about buying snacks, desserts and booze. Maybe allow yourself one big bag of pretzels per week. They are cheap, low in fat, and tasty.

About paying your bills - always pay the full amount requested on items that can be taken away from you like your home, utilities and car. Then pay the minimum on your other monthly payments.

Clothes - never pay full price. Wait for sales. Ask yourself whether you need it or want it. Replacing worn out sneakers is a need. Wanting shoes to match an outfit is a want. Thrift shops are misunderstood. If you take the time, you can find nice clothes that fit properly. Don't settle for clothes that are ill-fitting, stained or in bad repair. Be patient and picky. No one will ever know if you do this right.

Decorating - don't do it right now.

Go through the above crash diet on spending for at least 2 months to see just how much money you have left over for "wants." Write down every expenditure to give yourself an idea of just how much you can spend on stuff, movies, eating out and such. Write down how much money you will allow for fun or shopping each month.

If you want to buy something big, like a couch, you need to start saving and pay for it in full with cash. This is how Ross Perot worked his way up. Seriously!