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. Simple Ways to Eliminate Debt
  2. How to Eliminate Credit Card Debt Legally
  3. Strategies for Reducing Debt
  4. It’s Time to Pay Off Debts
  5. What Can Debt Relief Programs Do for You

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