Budgets. Collection agency agreements. Credit card negotiations. Debt reduction plans. Canceling cable. Eating Ramen Noodles for the rest of your life. These tips are all part of the getting out of debt echo chamber. Forget all that. What if there was one thing you could do to get out of debt? One thing that, if you stuck with it for an extended period, would truly help you get debt free? David Bakke from MoneyCrashers states that, yes, getting out of debt boils down to one principle…
“Understanding the difference between wants and needs with pure objectivity.”
What the heck does that mean? It means that you buy something for two simple reasons: 1) you need it or 2) you want it.
“So if you had to list out you needs, what would they be? I would start off with food, shelter, transportation, electricity, and the list goes on. If you really break down your needs in life—the only thing that you truly need is a roof over your head and food.”
This reeks of simplicity (I already hate it). David even gives us a simple method for going through this process. It’s in asking the question, “Do I really need this?” David explains that asking this question…
“…allowed me to get out of debt at a fairly rapid pace. It wasn’t until I incorporated this question into my everyday life that I fully realized how much unnecessary spending I had in my life.”
I’ve asked myself this question before but it was for larger purchases so the answer was more of a cop out. “Of course I can’t have the iPad.” In reality it was too easy. I would never arbitrarily spend $500 without talking to my wife first. And then the conversation would involve much laughing and a round of “just kidding!”
But I’ve never really asked myself the question when I buy that four $4 coffee or $25 book. But now I will. And I’ll report the results here. And let me know if this is something you’re doing, have done, or would like to do. Should we start a club?