Live an Above Average life – Email #4: Crank down your debts to zero (or so...)

    Live an Above Average Life

    Half way there!

    Crank down your debts to zero.

    Welcome to the fourth email in my July "Live an Above Average life" series. In the last email, we talked about possessing enough "buffer" money to withstand an unexpected emergency. Today, we're talking about debts.

    Here's a truth bomb: Debts aren't always bad, but if you look at the total consumer debt in the United States alone, it won't take long before you realize that there's a big, big problem here.

    Too many of us are spending money that we don't have. Check out this report published by Experian. Total consumer debt has passed $13 trillion.

    Experian report on Total Consumer Debt

    This is not good, and living an above average life means that you've taken control of your debt. It doesn't necessarily mean that you have NO debt.

    Instead, it means that your debts haven't put you into a position of weakness by spending money on stuff that depreciates in value and hurts your financial position.

    When it comes to debt, above average people:

    • Establish and maintain a good financial position (ie: emergency fund, retirement savings, etc) before accepting debts - for the exception of student loans taken younger in life for marketable degrees
    • Accept smart debts that are calculated and purposeful
    • Never take on a debt that they cannot pay back

    Use debt as a tool, not as a way to spend money that you don't have. Smart debts are those that improve our future and support our goals.

    The above average person recognizes that debts are not automatically bad, but they do need to be carefully managed. Otherwise, they put our futures at risk.

    Click the link below for details on exactly how this happens.

    Read on: The two reasons to go into debt