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The more I stare at the scary national debt problems the more passionate I become about eliminating my own personal debt.  I also want to have my friends and family eliminate debt on every front they can also.  I think this is how our country (US) will survive.  Let me throw around a few numbers:

The average US citizen earns $38,887 per year.  However, taxes takes out on average $17,818 per year for all the local, state and fed taxes.  This leaves your $21,069 to work with.  Since we know we’re running on a federal deficit this amount of taxes isn’t even gaining on the problem so expect more taxes.  WOW that’s a 45% tax rate overall.

Well you don’t even have $21,000 to work with because of your own debt.  The average personal debt per citizen is $54,065 with about 85% of that being mortgages.  So I’ll assume a 6% average interest rate for all of the debt costing everyone $3,243 per year in interest.  Now you have $17,826 to live off of. 

Basic food, lights, clothes, shelter etc will probably run you about $1000 per month per person.  So now you have $5,826 per year left to gain on any debt, or to be absorbed by any increase in taxes.  Not a very large margin of error.   This is why I need to eliminate credit debt now before I don’t have the income to get ahead at all.

My Debt Elimination Plan

1. Save an Emergency Fund – This will allow me to quit running to credit every time there is a problem.  I’m going to start with a small one, a couple of thousand dollars, and then pay off debt, and then build a bigger one.
2. Make a Budget – I hate doing this.  It’s even harder when you’re working with a spouse because you’ll disagree on the budget, but you have to do it.  You’ll be surprised how much money you waste in impulse buying every month. 
3. Increase my income – I’ve wrote about this before, it’s my favorite part.  If you increase your income you have more money to throw at the debt.  I plan on throwing any increased money directly at the debt without figuring it in the budget so it doesn’t get washed out in “slush funds.”
4. Sell stuff – If I can dump some things that will never go up in value and use it to pay down debt I win.
5. Stay at it until I’m debt free – Persistence is the key to winning period.

Related posts:

1. How to Eliminate Credit Card Debt Legally
2. More Than A Debt Problem
3. Debt Consolidation With A Home Equity Loan: Some Facts
4. 401K Loans – Worth the Risk?
5. Credit Solutions Start With You