A Case Study on How to Get Out of Thousands of Debt – Part 2
On our article yesterday, we started taking an in-depth look at the great case of John’s family, who thanks to their careful planning and determination managed to get out of a $26,000 debt in just under a year and a half and without having to apply for any personal loan.
You can read that article for some great insight on how John and his family started their planning and implemented it.
Now, let’s keep taking a look at what else they did to successfully become debt-free and avoid personal loans in the process.
Learn from Others’ Mistakes
When John first got married, he and his wife were had a home that they got together. However, they made a lot of mistakes with the personal loans the took for financing it and in the end, they had to sell and get another one. On that new house they had to refinance and ended up spending their equity. On top of that, they got that new home by applying for a personal loan that was virtually interest only, with no downpayment, which was a very unwise decision to make, since it got them in a lot of trouble later on.
So what they didi to get rid of their mortgage? Well, they ended up selling that house too and decided to rent instead of getting another personal loan for a new home.
Once renting, they started with their plan to become debt-free, and now that they achieved it, they will start saving for a new home.
While on paper it looks extremely exciting and encouraging to get out of debt, the process can take several months and even years, which can discourage people looking for quick results. This in turn can lead them to apply for a personal loan, which would be a huge mistake.
In the case of John, he and his wife started their eBay business and took it full time, which provided a nice amount of income, although not as much as they would have liked. Still, they didn’t apply for any personal loan. This resulted in their savings taking a lot longer to build up, but they also managed to get a lot of free time to share with their kids.
In the end, John and his wife are extremely happy with their approach that, while might take longer than expected, still allows them spend time with their children while at the same time enjoying the peace of mind of being completely debt-free and not owing any personal loans.
Becoming deb-t free also provided them with another great benefit: Since they don’t have any more debts to repay from personal loans, their new income, while lower than before, is more than enough to pay all they monthly expenses.
Patience is Key
One of the most stressing problems that students face nowadays is that they are acquiring more and more personal loans and student loans, so the moment they exit school to start their lives, they are already deep in personal loan debt. This can be very discouraging for young people fresh from graduate school, and can trigger a sense that savings will never be enough.
The best advice from John to people in this scenarios is to always take it slow and to concentrate on repaying their debts and personal loans no matter how hard it is and how long it takes. In addition to that he suggests don’t even consider taking other personal loans until all their debt is repaid. Help from friends and specially from family will be crucial in this stage, so if relatives can help you, then use that help.
And that’s it. Make sure to use this advice if you are in debt. The measures outlined by John might be a bit drastic, but they are certainly effective.