I was in debt since I made a stupid choice of selecting a wrong business partner in my first business. I was owner of the company and had all the responsibility, but was naive and gave him control over finances and over money which I invested.
Eventually he robbed me out of six figures, when I was in my early 20s and left me with debt.
It was a life lesson, I will never forget. Debt is slavery! When you are in debt, you don’t sleep well, your life is filled with anxiety and depression. Your everyday is struggle.
Luckily I was young enough, so I was able to bounce back on my feet and took another route. But I will never forget these lessons. I will never forget how it feels to be in serious debt and not have even enough money to eat.
In such times, you better have a supporting family and friends, or yet better, don’t ever get into such situation. How to avoid it, how not to get into debt at all?
Here is how:
Don’t spend money which you don’t actually have. If you don’t have money, pay for food and roof and nothing else. Pay for other things only if you can afford them.
If you don’t have money to survive for at least half a year, move to smaller apartment and pay lower rent. Sell your car and any other thing you can get money from.
Don’t take credit for anything, not even for real estate. Credit is debt and debt is slavery. I never understood why so many people make so stupid decisions to take long term credit, twenty years, thirty years for mortgage! You are slave all these years. You own your life to a bank. Life is full of uncertainties, you might lose your job, your business might fail, there might be some other disaster, for which you just can’t pay mortgage any more and you lose your apartment or house. The only time you should buy real estate, is if you get steep discount and pay majority out of pocket. Take five years of credit if you have to, fine, but don’t make stupid decision of taking long term debt. It is a call for disaster.
Don’t ever borrow money for whatever reason. Unless you don’t have money to buy a food and pay electricity bills, there is no reason to own money to anyone. And especially beware of loan sharks.
Always pay car, holidays or any luxury item with cash, and cash alone. And always buy these things only when you have cash to burn and are way below your means. Don’t ever purchase car or any other such thing with credit.
Have at least half a year worth of savings, one year is better and having side savings to live like you live now for five years or more is the best.
This is real security, so that no matter if you lose your job or business goes astray, you have money to survive and bounce back on your feet without worrying what to eat tomorrow.
Pay your bills on time, interests are expensive and this is only flushing money down the toilet. Less bills, less worries.
Don’t have family until you have finances in order. You should start your family only when you have control over finances, are not in debt and have the right woman.
Stay out of student debt. Better yet, think if you should go to the university at first place.
Don’t use credit cards. Some people will say: “But I will get credit scores”. Reality is though, that most people are simply not disciplined enough to pay credit card debt in time. Pay with cash and ask for discount because you pay with cash.
Control your own finances, don’t put your money into wrong hands, not even family members.
Live well below your means, not just within your means, but way below it. And don’t ever allow yourself spending more than you earn.
Just these simple things will help you stay out of debt and live better. Unfortunately, most people don’t think this way, they make stupid choices, like funding their cars and holidays with credit.
They spend all or most of the money they earn, they get into long term debt with bank and when they run of money they ask themselves: “Where did I go wrong?”