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No More Credit Card DebtsI focus on credit card debt in this step because this is generally the easiest to access, the most expensive, and the hardest habit to break. But you really need to stop all debt at this point. Cut up those cards. This can be a real struggle. I know it was for me. I had withdrawals because I couldn?t just run to the store for a new outfit, or buy that cool new gadget on TV. I was addicted to my credit card debts.
I soon discovered that the impulse and stress buying was costing me a lot. I would say "I’ve have such a hard day I just need to go to the mall." I would call my best girl friend. We would go out to dinner or buy a new pair of shoes. All stuff I didn’t need but thought would make me feel better. And it did make me feel better. For a while. Then just like a drug addiction I needed to do it more and more to get the same relief. But I learned that I didn’t have to give in to those impulses in order to be happy. The stress or "buy now" feeling soon passed and I was proud of myself for resisting. I didn’t feel that this change brought on undue hardships. I adjusted and soon I evaluated purchases much better. Credit card companies play on those stress feelings we all have. You may be stressed from a hard day at the office, or stressed because you need to keep up an image, or you think your kids need designer clothes. But you don’t! Things won't make you feel better. You are being manipulated into believing that these things will make you calmer, more fulfilled, more popular. But all these “things” do is create a desire for more stuff. 
Have you ever heard that "You can never get enough of what you don't need because what you don't need can't satisfy you." It's true The advertisers and credit companies know this. So they play on that addiction, not to help you live a better life but to get your money! Much of those credit card debts come from impulse or stress buys. There are many other, cheaper, things you can do to relieve stress:
The List goes on and on, the point is you can do things that will actually relieve stress for right now, and relieve stress later because you didn’t get into more credit card debts. Also you have to stop worrying about what your neighbors, friends, relatives think about you. I know this is an old adage but if your friends treat you that way are they really your friends? But more importantly, if you worry about your friends more than your pocket book you will end up just like them…in debt!
I repeat this over and over because if you want to get different results you have to take a different path than those neighbors. There are other kinds of debt to consider at this point; refinances, auto loans, student loans, etc. Lets talk about refinances. Generally not a good idea. The concept behind refinances is that you are getting a lower interest rate, plus combining all your credit cards into one bill. Seems reasonable. The problem is it puts you back to the beginning of your amortization period. This means that in the beginning of your home loan or refinance you pay all the interest for that loan in the beginning. Look at your home loan payment at first 90% of your bill is interest, meaning your are not getting out of debt or building equity. The first seven years are the worst! So by getting an extra loan you are paying more interest even if you pay it off early. Also what usually happens is you get another card in the mail and start again. That’s why it vital to say no to more credit card debts. Without it the refinance/loan consolidation would be unnecessary. 
Auto loans and student loans may be necessary during certain parts of your life. But minimize them as much as possible. Take our brand new car that we got. If we really needed a second car, which now we do, we could have gone much more modestly. Say a 3-4 year old car with a lot of miles left to it, that gets the best gas mileage possible. This will be less impressive to be sure, but I’ll let you in on a secret. Your friends really are not as amazed as you may think, and even if they are, it won’t last past the first impression. For example my husband drives a older car. But it is near and dear to our hearts. It lasted us all through college, gets great gas mileage and is paid off. It's not fancy but it acheives the purpose of getting us where we need to go. Which I believe is truly the point of a vehicle. Student Loan Debt is an area I am very familiar with! In some ways it can be good, if that is your only way to receive an education than it may be worth it. However, you can rack up a lot of student loan debt. Because it is not based upon your income you can get more than you will be able to repay. Be very, VERY, conservative with these loans. A couple thousand, here, a couple there. After 4 years it really adds up. My Point - Before you can start to get out of debt you have to stop getting further into it. No more credit card debt is your second step in the right direction.
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"A man in debt is so far a slave,"
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Copyright©
A Debt Free Life 2007.
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