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Think back to the hole and the dirt. Using your credit card makes a big hole with no dirt in sight to fill it back in. Using store credit, getting a personal loan for Christmas gifts, and any other debt that doesn’t have an asset bigger than the debt, has ruined our country’s financial prosperity. If I walk through neighborhoods in America, there are countless holes in yards with no dirt in sight. This leads to financial ruin. Any extra money you make just goes to buy more dirt to fill in the hole. It’s exhausting and it holds countless Americans back from pursuing the life God has for them. Consumer debt keeps people on the vicious paycheck to paycheck cycle.
I understand that times can be tight, but you are not captive to your paycheck. You are working on increasing your income. It will take time, yes, however, wealth gained bit by bit will last. Don’t speed up your lifestyle because your neighbors bought a boat before you did. Build bit by bit. One step at a time. And when you do, you’ll look back and see you’re standing on a mansion and there are no holes in sight.
If you’ve dug a hole of consumer debt, if you’ve racked up credit cards or taken out personal loans, it’s time to get to work filling in that hole. Once you have one month of your expenses saved away, you need to allocate all additional money in your budget to paying off consumer debt.
This is the phase where you really need to begin to ratchet up your income. You dug the hole. It’s time to fill it. I know it may seem like a big hole, but can I let you in on a secret? The dirt needed may be equivalent to one or two raises. The dirt needed may be one promotion away. What do you need to do, what value do you need to create in order to earn enough additional income to pay off your consumer debt?
If you want to get side jobs to pay off your consumer debt faster, go for it. But your first move shouldn’t be to work for Uber Eats. Your first move should be to increase the value of the hours you’re working, not the amount of hours you’re working. If you feel you are maximizing your value, then as a second step, you can begin to increase your hours. Value first, hours second.
I mentioned in our budgeting section that I have a credit card. I do! I use it every month for almost all of my expenses. But all expenses that are on my credit card are part of my planned budget and at the end of each month, I pay off the balance. I use a credit card because I get free flights every now and then. I don’t hold a balance and I don’t make unbudgeted purchases on my credit card. If there’s an emergency, I use my savings account, not my credit card.
If you have held a credit card balance and need to pay off consumer debt, you need to be consumer debt free for one year before I recommend even touching another credit card. You need a break and you need to learn new habits. I am not saying that you’ll never be able to use a credit card again, but it’s also not necessary. If you feel there’s even a chance you could fall into consumer debt again, there are no points in the world that are worth digging another hole.
Zach Santmier is the owner of Trumble Agency, Inc. and the author of the personal financial course, Increase. He focuses on helping families escape paycheck to paycheck living so they can freely pursue their ideal future.
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