Debt Elimination 2

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Debt Elimination 2

The First Step To Debt Elimination

Regardless of your personal and financial circumstances, your education and your background, the chances are the first step you need to take in debt elimination has to take place in your mind. The Western mindset, especially in the US and UK, is firmly fixed on consumer debt. It is the way you have been reared in a debt ridden society.

To be realistic, let us assume that total debt elimination is not practical, nor necessarily desirable, from a financial point of view. The one major exception is in buying a house. When you buy a house, very few people are likely to be in a position to do so with cash. Unless they have inheritance, are very wealthy, are moving down the house market, or moving from an expensive to a cheap area, people buying a house will require a mortgage.

There can be considerable financial gains in the long run from taking on mortgage debt. Firstly, you have to live somewhere, so living in your own home is more desirable than renting for the rest of your life. Secondly, if you are lucky the capital growth on the house over the years will increase your underlying wealth, in a way that cannot happen with rented accommodation, which has the opposite affect. So, let us assume, for the purpose of this article, that by debt elimination we mean the elimination of all your consumer debt, except your home mortgage.

You may well find that, if you can change your mindset to be against borrowing to feed your consumer desires, that mortgage will be paid off much sooner than your average contemporaries. When you reach that stage, then there is every possibility that your debt elimination will become total, and your mindset will be so changed that there is never a need to take on any new debt.

Changing The Mindset To Support Debt Elimination

You are unlikely to find it easy to alter your attitude towards consumer debt. After all, it is the way you have probably been brought up, surrounded by easy credit. However, changing that mindset is both possible and financially desirable; debt elimination is achievable if you can successfully get through this first stage in the process.

So, how do you change the way you think about debt? Now, I am talking purely about consumer debt, not borrowing money to start or expand a business; about using debt to satisfy your material desires earlier than you can really afford them. Business finance can, and often does, justify itself through increasing your wealth at a faster rate than the interest charges decrease your wealth.

Consumer debt, on the other hand, is guaranteed to reduce your financial well being. When you borrow money to spend on consumable items, such as holidays, and diminishing assets, such as cars, then your wealth building is undermined; your assets are reduced over time. That, really, is the key to altering your mindset to favour the elimination of debt from your life. You need to:

1. Be aware that consumer debt is not good for your financial well being. You are increasing the bank's assets, and decreasing your own, by spending on credit.

2. You need to resent the fact that the banks make money out of you, when it should be the other way round. It's your hard earned money we're talking about here.

By giving constant focus to those two things you may develop a mindset that is shifting towards debt elimination. You can then give yourself greater strength in your determination by convincing yourself that, not only is debt elimination possible in the long term, but it will bring with it many rewards:

1. You will feel financially comfortable and in control; it really is a great feeling as those around you drown themselves in debt.

2. Over the years you will accumulate significant wealth compared to those earning the same amount but whose debt has always been out of control.

3. You will be able to walk in to a travel agent and pay cash, or debit card, for each vacation, while the person behind you in the queue will probably pay by credit card and then struggle the whole year to pay it off before the next vacation.

4. You will be able to walk into a car dealer and negotiate the best possible price for a new car as a cash buyer, knowing that the cash is your own and not the bank's.

5. You will be saving regularly for all your needs, while paying off your mortgage within the term.

All the while, your wealth will be accumulating, not being stripped bare by interest charges.

Imagine, in 10, or even 5, years' time, a comfortable financial life with no pressures. You may not be a millionaire, but beside your peer group you will be a beacon of financial stability and growing wealth. It's a long term process, but once you have the mindset, the journey can become a smooth one, with good planning and determination. Debt elimination really can be the final goal.

In the next article I will look at planning to eliminate debt.

This debt elimination article was written by Roy Thomsitt, owner and part author of the Eliminate Credit Card Debt Now website.

In The News:

Yahoo! News: Top Stories

Stocks fall sharply on consumer spending worries (AP)

AP - The stock market is plunging again, diving along with investors' confidence in the economy. Confirmation that the nation is in a recession and reports of only a modest gain in holiday shopping sales have prompted many investors to resume selling after the market's five-session advance.

Obama announces Clinton, Gates for Cabinet (AP)

AP - President-elect Barack Obama picked a national security team headed by former campaign rival Hillary Rodham Clinton and Bush administration holdover Robert Gates on Monday, and said he wants to consult with military commanders before settling on a firm timetable to withdraw U.S. combat troops from Iraq.

Panel says US has been in recession since Dec. '07 (AP)

AP - The U.S. economy has been in a recession since December 2007, the National Bureau of Economic Research said Monday. The NBER a private, nonprofit research organization said its group of academic economists who determine business cycles met and decided that the U.S. recession began last December.

India demands strong action from Pakistan (AP)

AP - India demanded Monday that Pakistan take "strong action" against those behind the deadly Mumbai attacks, and Washington pressured Islamabad to cooperate with the investigation.

Palin implores Ga. Republicans to back Chambliss (AP)

AP - Alaska Gov. Sarah Palin implored Georgia Republicans to back Sen. Saxby Chambliss in his hotly contested Senate runoff, telling a cheering crowd Monday that the first step in rebuilding the GOP begins with the Southern state. The former vice presidential candidate made her first campaign appearance since the Republican ticket of John McCain and Palin lost on Nov. 4.

Rice says she won't give Clinton too much advice (AP)

AP - Happily contemplating another woman as the top U.S. diplomat, Secretary of State Condoleezza Rice said Monday she will offer advice, privately, and then get out of the way.

Asthma inhalers to go 'green' on Dec. 31 (AP)

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Ivana Trump separates from fourth hubby Rubicondi (AP)

AP - Ivana Trump has issued a statement confirming reports of marital discord with Italian entrepreneur Rossano Rubicondi. Trump, who married Rubicondi in April, says she filed a legal separation agreement three months ago. Trump says she kept quiet about it because she didn't want to ruin Rubicondi's chances as a contestant on the Italian edition of the reality TV show "Survivor."

Man says God ordered him to ram vehicle at 100 mph (AP)

AP - A man who rammed his truck into a woman's vehicle on a highway early Friday told authorities he crashed into her while going more than 100 mph because God told him "she needed to be taken off the road."

Giants' Burress appears in court, has bail set at $100,000 (AP)

AP - Plaxico Burress has appeared in court on weapons possession charges stemming from an accidental shooting at a Manhattan nightclub.

Obama names Clinton, Gates to lead foreign policy (Reuters)

Reuters - U.S. President-elect Barack Obama named former rival Hillary Clinton as secretary of state on Monday and said Robert Gates would remain defense secretary in a national security team charged with recasting America's leadership role in the world.

Stocks slide as Bernanke confirms economic stress (Reuters)

Reuters - Stocks tumbled on Monday as economic reports showing further evidence of the worsening global economic climate were backed up in comments from Federal Reserve Chairman Ben Bernanke.

India demands Pakistan act decisively on Mumbai attack (Reuters)

Reuters - India demanded Pakistan take decisive action over deadly attacks in Mumbai it said were carried out by militants from its nuclear-armed rival, while the West urged cooperation to ease tension.

Bush calls flawed Iraq intelligence biggest regret (Reuters)

Reuters - President George W. Bush said the biggest regret of his presidency was flawed intelligence that Iraq had weapons of mass destruction and told ABC "World News" in an interview airing on Monday that he was unprepared for war when he took office.

U.S. in recession as Europe debates spending hikes (Reuters)

Reuters - The U.S. economy has slumped into a recession, the nation's business cycle arbiter declared on Monday, while European leaders clashed over how much public money to spend tackling a deepening downturn.

House to push $500 billion stimulus bill (Reuters)

Reuters - U.S. House of Representatives Speaker Nancy Pelosi met leading governors on Monday to discuss the size and shape of an economic stimulus package that one Democratic aide said was likely to cost around $500 billion.

Thai protesters consolidate hold on airport (Reuters)

Reuters - Thai protesters prepared to end their three-month occupation of the Prime Minister's office on Monday to consolidate their grip on the main airport ahead of a court verdict that could dissolve the elected government.

Alabama mayor arrested on corruption charges (Reuters)

Reuters - Federal authorities arrested the mayor of Birmingham, Alabama, on Monday in a corruption probe surrounding a massive sewer bond debt that has forced Jefferson County to the brink of bankruptcy.

Hawkish Obama names Clinton as top diplomat (AFP)

AFP - Barack Obama on Monday nominated Hillary Clinton to be his "tough," "smart" secretary of state and his former foe vowed to give her all to steer America through a perfect storm of global crises.

Mumbai attacks: India demands Pakistan take 'strong action' (AFP)

AFP - India on Monday formally accused "elements" in Pakistan of being behind the devastating Islamic militant attacks in Mumbai and demanded that Islamabad take "strong action".

Debt Elimination 2

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