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Personal debt continues to be a major problem that plagues the people of many of the world's developed countries as people find it harder and harder to make repayments plus interest on money they borrowed. Conventional wisdom, traditional financial planners, the media and often our families, tell us that it will take determination, good record-keeping and self-discipline to become debt-free. Certainly, to become debt-free initially, maybe these qualities, alone, can go the distance. But they actually fall short for those wanting to stay debt-free over the long-term. That's another story altogether.
Becoming Debt-Free is Not Staying Debt-Free
Without context (background) the daily effort needed to remain debt-free erodes over time. Sometimes and sometimes gradually, many families and individuals, who, having worked hard to become debt-free, lose their resolve. Credit use begins and debt creeps back into their lives. At some point, they may find themselves back where they started like those on yo-yo diets.
Why? What Happened?
Insistent and all types of manipulation from media target every emotional hook that can potentially get us to buy, buy, buy and "keep up with the Joneses". In an ever-encroaching commercial world, we still have a powerful tool and defense virtually no one can take away.
The Secret Ingredient to Living Debt-Free for the Duration
The secret ingredient? Knowledge. Knowledge is power. A fully informed thinking process about money and wealth makes all the difference. It fuels the ongoing motivation we all need to do whatever it takes to remain debt-free. Such knowledge exists today in easy-to-understand language for anyone who seeks it.
The Twin Missing Pieces about Money and Wealth
The Reader Digest's version is as follows. Money is actually a debt instrument. 95% of it is initially issued by a central bank somewhere in the world when it is BORROWED (Federal Reserve Note written on the back of the US dollar). It must be paid back with interest so there is never enough money in the world to pay back debt. Think: The children's game, musical chairs. Interest compounds over time. Business owners add the cost of money they borrow (debt-service), on to the cost of their goods and services we all purchase. As a result, over time, central-banking money of every nation loses value and people lose purchase power (buy less with more). What was purchased in the United States in 1913 now cost over $ 21.00. You can confirm this fact on any online inflation calculator.
Wealth: We have been taught that first and foremost wealth is money. Yet the most prestigious English language dictionary, The Oxford English Dictionary, defines wealth with material abundance as the 3rd and final definition whereas personal and spiritual well-being is the first.
Wealth (The Oxford English Dictionary)
1. The condition of being happy and prosperous; well-being. 2. Spiritual well-being. 3. Prosperity consisting in the abundance of possessions; "worldly goods", valuable possessions, especially in great abundance: riches, affluence.
Independent research on this topic is time well spent. Eyes wide open about how money really works changes our view of wealth. We are able to discern the value of putting personal and spiritual well-being as the first of wealth's meanings. Money loses its value over time as a debt instrument and is the for-profit product of a private central-banking system. No everyday person has control over it. However, we have the power individually to opt-out of the social agreement that wealth, first and foremost, is money and what it can buy.
Otherwise, you can expect some combination of commerce, media, family and peasants to shape your thinking and financial habits according to the conventional model. It even happens to those who once achieved a debt-free status. On one hand we are told to get out of debt and live within our means and on the other, commerce seduces us in every emotional way imaginable to use your good credit.
The Value of an Intangible Financial Foundation
When we base our financial foundation on the intangible of personal and spiritual well-being, something astounding happens. It redefines success. Unbridled enthusiasm to accumulate things loses momentum. Through the lens of well-being, material wealth takes on a new dimension. Should you believe that the purchase under consideration of a new home, wardrobe, furniture, vacation, etc. would amp up your stress levels, you know without a doubt that the time was not right to buy.
Your Expanded View
An expanded view of money and wealth is the portal though which new insights will continue to flow. For example: Who would have thought that the financial / banking industry, the largest educator of "consumers" about money and finance, would hold back vital information about how money works? As a result, people continue to borrow and spend in ways they otherwise would not, given additional information. But because over 70% of the American economy is based on consumer spending, well … systemic self-preservation trumps full disclosure.
You May be on Your Own but You are Not Alone
People through the world who are "in the know" apply practical tactics, some traditional and some outside-the-box to get out and stay out of debt. But, as always, the challenge of any minority view is to be able to stand in the face of consensus reality and stay strong and true.
Once you realize that all central banking and therefore, our economy, is based on debt, you also understand that there is more to wealth and becoming debt-free than meets the eye. Here are some further recommendations. Some you have heard before and others, probably not, because they reflect the whole story about money. You might want to check out a helpful animated film called Money as Debt. You can find free versions online or visit their website.
1. Get out of debt. Mortgage debt is still debt.
Pay down and hopefully eliminate debt. Personal debt can unwittingly trap families into a regrettable matrix. Increased personal freedom is the intangible value of getting off the hamster wheel forever.
Prioritize who you pay first. Most people have several different creditors. Pay off debt in descending order; starting with those requiring the highest amount of interest and so on. This will encourage you.
2. Stop relying on credit and leveraging debt.
The financial industry makes money when you use credit and leverage existing debt into another interest-bearing loan and so will not discourage you from doing so. Cut up your credit cards. Credit availability cultivates a mindset of instant gratification. If this is too radical for you, keep one card and put it in your freezer in water. That will give you pause as it thaws, before you act on impulse.
3. Live below your means.
Compare what you earn with what you spend every month. Write it down. Then, do whatever it takes to have more money coming in than going out. The commitment to live below your means generates a process: You may need to downsize purchasing expectations and your current lifestyle, spend less, buy bulk and used, etc. This tactic alone can provide peace of mind.
4. Create cash emergency funds.
With money you might glean from living below your means, pay into a short-term savings funds for car maintenance, home projects and repairs and general emergencies so you will not have to rely on credit. Also, keep a useful amount of cash safely on-hand, to not have to be completely dependent on banking institutions, especially in hard times. Remember 1929 and Argentina, 2001.
5. Develop a cash-flow engine.
Create one or more cash-flow engines. In these uncertain economic times, it is very helpful to have an independent income. Learn to drive your financial life forward without thinking you need fall back on credit. When researching such work, consider the goods and services people would pay for in both good times and bad. Those on a fixed income are not immune because of an exponential raising cost-of living that will require additional financial resources if to avoid the credit trap.
6. Grow your own food.
It takes less space than you think to grow your own food. Insure the safety of your food, eat abundantly and share food with your neighbors. Or, support local farmers via Community Supported Agriculture (CSA) organizations.
7. Consider an alternative currency system.
Alternative currency provides access to a second-tier economy and maximizes your purchasing power. Do a web search to find what is offered in your area.
8. View your life as the cup half-full.
Remember to count your blessings. Victims are not empowered to take action. Turning off your TV really helps because mainstream media conditions you to believe that "more is better".
9. Do not wait to get started.
Time is of the essence. In a debt-based monetary system money is always worth the most today, not tomorrow. With each passing day, money will be worth less as inflation erodes value; including that of nest eggs. The sooner, the better, for both you and your family.
Below are three strategies that include the specific tactics mentioned above.
1. Create a Stable Foundation in the Present. Traditional personal finance strategies often become counterproductive because they overlook an essential risk factor; how money works in context of a monetary system. As with health issues; without knowledge of the cause of symptoms, treatments often lack full effectiveness. The ability to consistently build wealth and make sound decisions over time increases with one's personal equilibrium. Learning how to create and maintain a stable financial foundation in present time and why it is critical to do so leads to the personal well-being needed to make good decisions for future security.
2. Leverage Money's Value Today. Since debt-based currency is always worth the most today, not at some time in the future, learning about and employing every tactic possible to leverage the value of money today makes sense. The goal being to pay the least amount possible for the greatest amount of value by buying in bulk, managing consumption, living simply, etc. Tomorrow, one thing is usually true: Either prices will rise or you will get less for the same amount of money.
3. Consider People-to-People ™ Investing. The conventional retirement model has been to establish a "nest egg" combined with one of pension and Social Security. However as pensions evaporate and nest eggs dwindle with the rising cost-of-living, millions of people need to rethink their retirement if to not outlive it.
There are under-considered risks to money parked passively in traditional interest-bearing retirement products. One is that upon conversion of the 401 (k), IRA, etc., you lose the purchasing power of that money you once had. After conversion fees and any taxes are paid, proceeds often end up to be an amount less than what you planned for and need going forward.
People-to-People Investing ™ is about capitalizing worthy people, projects and viable small businesses capable of both financial success and adding value to the community. Such investment, done responsibly, provides an additional cash-flow in keeping with the goal of lowering one's reliance on credit and staying ahead of a rising cost-of-living.
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The good news? You can absolutely become and stay debt-free for the long-term. Sometimes the bad new is that most people need to take some time to get the big picture about money and wealth.
Ultimately, there is a war on for the control of how we think about money and wealth. To date, the "little individual" is losing the battle. In a debt-based world, commerce absolutely depends on the use of credit and the leverage of debt to achieve financial success. Although you certainly can become debt-free via self-discipline alone, like a fish swimming upstream, the long-term odds are against you.
For those who choose to become fully informed, long-term debt-free living, personal freedom and peace of mind, are there for the taking. The choice is yours.
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Source by Susan Boskey
