The only way to get out of debt is to understand why you’re in debt in the first place.

And the truth is…

You will not save money when you get your next raise. You will not save money when your car is paid off. You will not save money when your kids are supporting themselves someday. And you wouldn’t even save a dime if I handed you $100,000 in cash right now.

How do I know this?

Because saving money has very little to do with the amount of money you have. In fact, you will only start to save money when saving becomes an emotional habit – when you start treating the money you handle everyday differently.

So this is why you are in debt:

You buy miscellaneous crap you don’t need or use. – Stop buying ‘stuff’ on impulse! Avoid the mall! The mall is not a source for entertainment. It’s a source for personal debt. There’s no reason to tease yourself by staring at a bunch of brand new crap you don’t need. And as you know, the novelty of a new purchase wears thin long before the credit card bill arrives.

– Stop buying ‘stuff’ on impulse! Avoid the mall! The mall is not a source for entertainment. It’s a source for personal debt. There’s no reason to tease yourself by staring at a bunch of brand new crap you don’t need. And as you know, the novelty of a new purchase wears thin long before the credit card bill arrives. You use credit to purchase things you can’t afford to buy in cash. – If you can’t pay for it in cash today, don’t buy it today! It’s as simple as that.

– If you can’t pay for it in cash today, don’t buy it today! It’s as simple as that. You think of certain product brands as fashionable status symbols. – A car gets you from point ‘A’ to point ‘B.’ A purse holds your personal belongings. A pair of sunglasses shades your eyes from the sun. A shirt keeps you warm. If you’re paying premium prices just to get a fashionable brand name labeled on each these products without any regard for how well the products actually serve their practical purpose, you have a problem.

– A car gets you from point ‘A’ to point ‘B.’ A purse holds your personal belongings. A pair of sunglasses shades your eyes from the sun. A shirt keeps you warm. If you’re paying premium prices just to get a fashionable brand name labeled on each these products without any regard for how well the products actually serve their practical purpose, you have a problem. You buy a brand new car every few years. – See my previous point. A car is a means of transportation to get you from one place to another. If you’re buying a new car every few years even when your old car works fine, you’re likely trying too hard to impress the wrong people… and you’re going broke in the process.

– See my previous point. A car is a means of transportation to get you from one place to another. If you’re buying a new car every few years even when your old car works fine, you’re likely trying too hard to impress the wrong people… and you’re going broke in the process. You buy things you could have borrowed from a friend or rented. – After you bought that DVD, how many times did you actually watch it? Do you really want a 20 inch chainsaw collecting dust in your garage? So you own a pressure washer you only use once every three years? You get the point… borrow and rent when it makes sense.

– After you bought that DVD, how many times did you actually watch it? Do you really want a 20 inch chainsaw collecting dust in your garage? So you own a pressure washer you only use once every three years? You get the point… borrow and rent when it makes sense. You pay retail prices on everything you buy. – If you’re paying retail prices, you’re getting screwed. You can easily save well over $1000 a year on general purchases by waiting for sales and shopping at discount outlets.

– If you’re paying retail prices, you’re getting screwed. You can easily save well over $1000 a year on general purchases by waiting for sales and shopping at discount outlets. You own (or rent) way more house than you need. – When you buy or rent a house that’s bigger than you need, you end up wasting lots of money on larger monthly payments, higher upkeep costs, higher utility bills, and lots of random ‘stuff’ to fill up the extra empty space.

– When you buy or rent a house that’s bigger than you need, you end up wasting lots of money on larger monthly payments, higher upkeep costs, higher utility bills, and lots of random ‘stuff’ to fill up the extra empty space. You don’t follow any sort of formal budgeting plan. – Do you assume that if you wait around and make more money your finances and credit debt will magically resolve themselves? I’m sorry to say, you’re dead wrong! It takes a lot of planning and proactive budgeting to erase a pile of debt and build a nest egg of wealth. So start now!

– Do you assume that if you wait around and make more money your finances and credit debt will magically resolve themselves? I’m sorry to say, you’re dead wrong! It takes a lot of planning and proactive budgeting to erase a pile of debt and build a nest egg of wealth. So start now! You don’t automate 401K or savings deposits. – We’re ten years into the new millennium. If you aren’t using simple technology to automate savings deposits, you pretty much deserve to be broke.

– We’re ten years into the new millennium. If you aren’t using simple technology to automate savings deposits, you pretty much deserve to be broke. You don’t leverage the small investments you do have. – You have to give your money the opportunity to make money. Any capital you do have, no matter how small, should be invested using a basic, long-term investment strategy . If your capital isn’t invested, it’s just losing value as inflation rises.

– You have to give your money the opportunity to make money. Any capital you do have, no matter how small, should be invested using a basic, long-term investment strategy . If your capital isn’t invested, it’s just losing value as inflation rises. You’re married to (or dating) a spend-thrift. – You’ll never get out of debt if you’re married to a person who spends every dime you make. So help your soul mate become financially responsible, or except life in the poorhouse.

– You’ll never get out of debt if you’re married to a person who spends every dime you make. So help your soul mate become financially responsible, or except life in the poorhouse. You’ve never educated yourself on basic money management. – Responsible money management is not an innate human instinct. You have to properly educate yourself . If you don’t, you’ll stay exactly where you are now, in debt.

– Responsible money management is not an innate human instinct. You have to properly educate yourself . If you don’t, you’ll stay exactly where you are now, in debt. You have a ‘get rich quick’ mentality. – For 99.99% of us, wealth doesn’t come instantly. You’re far more likely to be struck by lightning twice than win the lottery once. If you’re spending your time and money on a ‘get rich quick’ scheme, the debt will just keep piling up.

– For 99.99% of us, wealth doesn’t come instantly. You’re far more likely to be struck by lightning twice than win the lottery once. If you’re spending your time and money on a ‘get rich quick’ scheme, the debt will just keep piling up. You have nasty, money-sucking (and life-sucking) habits. – Smoking, drinking and gambling are all perfect examples of bad habits in which you choose to trade short term pleasure for long term debt and discomfort. So light one up, shoot one down, and toss another chip across the table. It’s only your life.

– Smoking, drinking and gambling are all perfect examples of bad habits in which you choose to trade short term pleasure for long term debt and discomfort. So light one up, shoot one down, and toss another chip across the table. It’s only your life. You waste too much of your own time. – They say “time is money,” but I think time is way more valuable than money. It’s the single greatest constituent of life. If you fail to properly manage your time, you’ll absolutely fail to properly manage your money… and you’ll likely fail in every other aspect of your life as well. So focus your time and energy on the important stuff and forget the rest.

– They say “time is money,” but I think time is way more valuable than money. It’s the single greatest constituent of life. If you fail to properly manage your time, you’ll absolutely fail to properly manage your money… and you’ll likely fail in every other aspect of your life as well. So focus your time and energy on the important stuff and forget the rest. You aren’t taking care of your health. – Keep your body and mind healthy! Major medical problems drain back accounts, increase insurance rates, keep you from working and earning money, and generally guarantee that you will have long-term financial problems.

– Keep your body and mind healthy! Major medical problems drain back accounts, increase insurance rates, keep you from working and earning money, and generally guarantee that you will have long-term financial problems. You aren’t enjoying life’s (free) simple pleasures. – The best things in life are free. Stop wasting your money on second-rate entertainment and take a good look around you. Mother Nature offers lots of entertainment free of charge. Go hiking, go skinny dipping, play in the rain, build a bonfire with your friends, watch the sunset with your lover, etc.

– The best things in life are free. Stop wasting your money on second-rate entertainment and take a good look around you. Mother Nature offers lots of entertainment free of charge. Go hiking, go skinny dipping, play in the rain, build a bonfire with your friends, watch the sunset with your lover, etc. You went through an unfortunate divorce. – This final point might seem cruel, but it’s impossible to discuss the major reasons why people accumulate financial debt without mentioning divorce. Divorce absolutely destroys the finances of both parties involved. So the best advice I can give you is: Don’t get married until you’re certain you want to spend the rest of your life with your significant other. And don’t get a divorce until you’ve truly exhausted all of your other possible options (marriage therapy, etc.).

Please remember, financial debt can be avoided and erased. It just takes a little effort, education, and determination on your end to make it possible. So as I’ve said before, live a comfortable life, not a wasteful one. Do not spend to impress others. Do not live life trying to fool yourself into thinking wealth is measured in material objects. Manage your money wisely so your money does not manage you. And always live well below your means.