If you are a follower of the teachings of Dave Ramsey, you probably already know or have heard about the 7 Baby Steps to start you on the road to financial independence. If you are not familiar with the 7 Baby Steps, Patrick over at Cash Money Life gives a great explanation of each step.

No More Debt is not an official part of the 7 steps but it is certainly an important step on the ladder to financial independence.

If you were drowing in a pool, would you want someone to pour more water on you? If you were trying to lose weight, would you eat more food? If you were driving along and saw that you were about to hit the car in front of you, would you speed up? The previous questions have one common theme; don't do things that can make a bad situation even worse.

Taking on additional debt while you are trying to get out of debt is a prime example of making a bad situation even worse. If you are trying to get out of debt, you don't want to continue to borrow your way into a deeper hole.

Here is my story:

One of the biggest obstacles for me when I first started trying to get out of debt, was trying to pay down debt but at the same time, I was adding on more debt. When I would pay off a credit card, I would apply for a new card and run up the balance or do a balance transfer with the intent of paying the balance off before the intro period expired. When the into period expired, not only did I not pay the balance off, I'd run up a balance on the card that I'd use the balance transfer to pay off. Every time this happened, this pushed me farther away from my goal of being debt free. It was not until I made a promise to myself that I would not take on any new debt that I started to finally start to see my debt decrease.

I promised myself I would no longer continue to finance a new car every two years like I used to do. My goal for my next car is to pay CASH and not take any more car loans. It can and has been done and I can do it too. I will no longer make purchases on my credit card that I could not afford to pay in full the next month. The only thing I plan to ever finance again is a home. A home is something I can not readily pay cash for. I can make a large down payment but it is hard to pay 100% in cash.

By making the above promises and sticking to it, I was able to pay off all my credit card debt. Make a promise to yourself today...NO MORE DEBT!

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6 comments

  1. Bill Man // February 26, 2008 at 2:59 PM  

    I think that's the norm for many of us. My biggest pitfall has been when I finally pay off a credit card, I end up running up the balance on it again just because "I have room in that card".

    It was a never ending cycle.

  2. Kim // February 26, 2008 at 4:02 PM  

    It's amazing to me how many people spend more on their car payments than they do their mortgage in my area. My car has 93K miles on it but I paid it off in 2000...I hope it lasts another 93K miles while I squirrel away cash for buying my next one.

  3. Mr. Debtbeater // February 27, 2008 at 7:44 AM  

    Guilty as charged! For years, my wife and I have treated room on a credit card, or the "buying power" we had, as money in the bank. As soon as we'd paid down on a card it was "oh yeah, we've got another $1000 we can spend to get that thingamajig we've been wanting.

    Changing that mindset was definitely the behavioral change Ramsey is intending before being able to start the baby steps and have successful results.

  4. kentuckyliz // February 27, 2008 at 6:12 PM  

    Jerrold Mundis' book talks about this in a compelling way. He calls it debting (verb)...and ya gotta stop. Borrowing from AA concepts: one day at a time. Wake up each day and tell yourself, today, no new debt. Do that every day and you'll be fine even if it takes a while to pay off the debt you do have.

    Good post!!!

  5. Ugly Debty // March 10, 2008 at 12:09 AM  

    New debt was the first thing I promised myself I would not do. That was how I broke the cycle and started my debt free journey. I used to do EXACTLY what you're saying in your post.

  6. bob55 // June 3, 2008 at 1:57 AM  

    I'm also promised like "ugly debty"
    but many peoples i saw take the wrong one and spoil their life.....
    they must read the correct procedure like your article....
    thankx
    ========
    Bob
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