Goodbye to Debt
The new American status symbol and how to achieve it
On the job, such feelings manifest themselves in lower productivity. About 15 percent of workers have money problems that affect the bottom line, says Prof. Thomas Garman of the Personal Finance Employee Education project at Virginia Tech. "You're moaning and groaning at the coffee machine about too many debts and money problems," he says. "You're wasting time on the phone trying to get a debt-consolidation loan."
Part of the impetus to shun debt flows from the simple-living movement--the push for an unencumbered life, with the time and resources to do what you please. Debt is its antithesis. "When you are in debt, you lose your freedom," says Janet Luhrs, editor of Simple Living: The Journal of Voluntary Simplicity, a Seattle newsletter. "You simply can't be free if you owe a bunch of money, because you have to work whether you like it or not." A contributing trend is the growing Christian movement to get away from debt on religious grounds (story, Page 70).
A booming stock market provides another catalyst. Debtors who cannot afford to invest find themselves more frustrated than ever at their inability to save. Financial planner Locker says many new clients tell her that if they had put the money they have spent on credit-card debt into the market they would be rich by now. "They are probably right," she says.
How to get out of credit-card debt is no mystery. Owning up to the problem is the first step. Forget about the amount. Are your debts causing you any level of emotional or psychological discomfort? "If they are, you probably have a 'debting' problem," says Mundis, who suggests adopting the creed of abstinence that guides recovering alcoholics. "If you don't pay that card off in full each month when that bill comes in, you ought not to use those cards," he urges.
Beans and rice. The next step is to stop spending or get a supplemental income--or both. Greg Westley of Pompton Lakes, N.J., is a medical editor by day and moonlights as a personal trainer and bartender to delete a $30,000 debt he and his wife incurred for their wedding two years ago. They live frugally--no vacations, no dining out, no new clothes every season. With a baby on the way, Westley is extremely fearful of a debt-laden existence. "Everyone we know has mortgages over $1,500, and they eat peanut butter every day."
Debtors also need to avoid playing roulette with the cards in their wallets. "The more cards you have, the easier it is to hide your debt," says author Stanley, who urges debtors to stick with one card. Tracking spending patterns can also lead to obvious places to start cutting back. That's one of the tips in Surviving Debt: A Guide for Consumers (National Consumer Law Center, $15), a gold mine on topics like how to handle collectors, which debts to pay first, and how collection lawsuits work.
Means to an end. Having an emergency fund to tap in times of crisis can also keep the plastic monster at bay. Many people are so deep in debt they are living beyond their paychecks; if the brakes give out or the furnace goes on the blink, there's no way to pay except falling back on credit. Most recovering debtors have a simple strategy for starting to build that fund: Stay out of the mall and salt away the savings. "We don't expose ourselves where we are constantly tempted by the latest gizmo on the shelf," says David Heitmiller, coauthor of Getting A Life (Viking, 1997, $23.95). That's a tough lesson to learn when seduction surrounds you and many people see the American dream as having it all. "You have to shut down that little demon in your head that says you are not good enough unless you have all this stuff," says Jennerjohn.
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