I'm broke. As Dave Ramsey would say "Why would you want to take advice from a broke person?" First off, I am not offering my own advice, but sharing what I am learning, and applying to my own life, and there will be something to learn from my experiences.
I started wanting to get serious about our debt problem last spring (2007) after hearing Dave Ramsay talking about his debt snowball plan, but I got stymied 3 weeks later when my wife had to leave the country and got (us) hit with thousands of dollars in medical bills. This only made our situation worse. See"How We Ended Up in Debt Hell"
Now we are faced with a do or die situation, and have had one last lifeline thrown our way, so it's now or never.
What I have learned so far from listening to Dave Ramsey and reading blogs like Get Rich Slowly, and Zen Habits is that 1) You need to stop borrowing. Now. Immediately. Totally. ANY borrowing adds to your debt and means a greater output of money each month.
2) You need to spend less than you make. This can be accomplished to some degree by cutting back on things, and cutting others out. Alternately you can find ways to increase your income if that's possible. Ideally you can do both.
3) You need to get current with your bills and establish an emergency fund, which should, ideally be at least $1000.00 if you're still in debt, or up to 3 months living expenses once you're debt free. When (NOT IF) life's incidentals hit, you can deal with them without going back into debt.
4) You need to start paying down your debts, as quickly as possible.
5) You need to plan your spending, which means some sort of budget. Even if you're in debt you regain even some measure of control over your life again.
More on these later in separate posts.
This is my online journal documenting my attempted escape from debt hell. If you think that applying the term "hell" to being in debt is too extreme, you've probably never come close to the point of no return.Please feel free to follow me on this escape mission, maybe all of us will learn a thing or two along the way.