Dieting from Debt

Alright -- I KNOW I shouldn't be watching Oprah, or I'll have to give up my membership in the "true blue male" club, but have you seen her show this past week? (I promise I'll quit watching it when my wife no longer needs me to walk the baby in the afternoon in order to get a nap... Honest!)

In any case, Oprah's doing a series on how to get out of debt without going bankrupt. I hate to admit it, but it was full of really good advice. Heck, it was advice I might have given myself in this very blog.

Astoundingly, many of the couples who were featured on her show had debt that equalled or exceeded the yearly salary of both partners combined -- and most of these people were making a pretty good living! A case in point: one couple took home over $100,000 (gross) combined, and yet had debt on credit cards totalling more than $170,000! In the calculation of debt, no one included a mortgage. The only debt included was debt that wasn't building anyone equity or doing anyone any good.

The first piece of good advice was to live on the amount you take home -- NOT on the gross amount you make. After all, if you make $100,000 then there is a goodly portion of that which is going to Uncle Sam right off the top. So, live on the real amount you take home -- which is much less.

That was one of the best tips. Here's another one: pay your retirement savings and "emergency" savings account before you count what you have to live on. Many experts call it "paying yourself first". If you do this, and live within your net income after savings, you'll be so far ahead of the crowd, you won't know the crowd is even there.

Michael

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