Overcoming Personal Debt: Are You Sure You Can Afford To Save So Much?

"For every dollar you spend, you get a Frequent Flyer mile." Wow! We could get a free trip just by putting our furniture on our credit card. Spend $25,000, get 25,000 free miles and have enough for a FREE round-trip ticket.

Buying that airline ticket might cost $300-500, depending on where we travel. But if we use the free ticket to travel, how much did that FREE ticket really cost?

Let's say you have a balance of $25,000 on a credit card and you STOP using it today. If your interest rate is 14.99%, an average percentage, and you pay the minimum payment of $329 every month, it will take you 20 years to pay off the balance. You will have paid $78,960 on that $25,000 balance. They made $54,960 just in interest, not counting additional fees such as annual fees.

That free ticket cost you $54,960.

That might be a little exaggerated, but it shows how powerful debt creation is. A Federal Reserve study showed that 43% of US families spend more than they earn. How can you spend more than you earn unless you are using plastic to fill in the gap?

The credit card industry collected 43 billion dollars in late-payment, over-limit, and balance-transfer fees in 2004. The average family has 13 credit, debit and store cards. Where are you and your family in this picture?

The other day I was getting my nails done by the Asian owner of the nail boutique. We were chatting about her life here in America and I asked if she was able to travel back to her country to visit her family. She responded, "I can't afford to go. I live the American way now." Confused, I asked what she meant by that comment. She laughed and said, "You know, we are so far in debt that we don't have extra money for vacations."

What is the solution to stop this spiraling out-of-control credit card spending and personal credit card debt?

The first step is to stop using your credit cards for purchases and use your debit card. The great thing about debit cards is that if the money isn't in your bank, the card will not be approved. You are not buying on future money.

Next, depending on your philosophy, you have a choice to make about how you want to eliminate debt. My husband's belief is that we should "cut the fat!" No spending, cut back, and buy everything at the Dollar Store. This will work. However, it is certainly poverty and lack thinking, and how much fun is that?

My belief is that it is a good idea watch more carefully where we spend money. At the same time, let's concentrate on making more money. When we increase our income, we can use that money to pay off our personal debt. There is abundance in the Universe and if I make more money, I can enjoy paying off my debt and shopping at Nordstroms!

In the Law of Attraction, what ever we focus on will grow. If we focus on debt, we will get more of it. If our attention is on making more money, that will grow. My advice is to focus on making more money, pay as you go, and enjoy the journey to a debt-free life.


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Marilyn Schwader and Linda Schwader are successful entrepreneurs with a passion for helping people remove their daily struggle for money so that they can focus on the change they want to be in the world. If you are ready to start your own home based business, if you have drive, focus, integrity, and ambition, and aren't content to wait and see what life gives you, but are ready to create your own business, then we encourage you to contact us.