It is better to appear poor and have great wealth, than to appear wealthy and be very poor.
Unfortunately, as certain cultures place a priority on having more “stuff”, many lose their way and borrow to create an appearance of wealth, without having built the prerequisite foundation. They are not building wealth, but rather an illusion of wealth.
Owing interest on debt associated with the grand wealth illusion significantly decreases the odds of real success. Debt is the cruelest of slave masters that will rob any excess value you create. The debtor knows they are living a lie, and it takes tremendous energy to keep up the appearances. Over time, severe debt can take a toll on one’s health through anxiety attacks, stress, and even heart attacks or suicide attempts.
You cannot solve a problem if you don’t acknowledge it. The debtor however has a high need to keep up appearances, and therefore has a difficult time acknowledging their problem. So the first step, and probably the most difficult step, to eliminating debt is to acknowledge there is a problem. It is important that the debtor fully comprehend and feel the cost of the decisions they have made. Even a little debt is not a good thing.
The second step to eliminating debt is to recognize that it is okay to appear poor, to live a minimalist lifestyle. As I stated at the top of this article, it is better to appear poor and have great wealth, than to appear wealthy and be very poor. Nobody ever disrespected someone who pays their bills on time or early. So if you appear poor and pay your bills, you will still be respected.
Ultimately, the “stuff” has to go. Sell the expensive cars. Stop the luxury vacations. Stop dining out, and instead learn to cook and make your own lunches. Stop being the hero, spending money on friends or lending to them. Recognize that you cannot effectively help others except from a position of strength, and debt is a weak position. Sell the ATV, the boat, the airplane. If necessary, move to a smaller house or apartment. Do whatever it takes, but get out of debt. Use all cash proceeds to lower you debt.
Next, set up budgets and track your spending……every penny of it! If your financial partner in life is ready leave you because you are being too cheap living within your budget, then you know you are doing it right! Do not let your life partner deter you. Don’t allow the debt slave master rule you, forever keeping you hostage. Continue to pay down that debt according to your plan until it is completely eliminated.
Once all your debt is gone, continue living the minimalist lifestyle you adopted, using the excess cash flow to invest. You will be surprised at how quickly your assets will grow with time. Eventually, as the assets grow, the earnings on those assets will also grow. Strive to live off the earnings only. When you can live entirely off the earnings, you will have earned your freedom from the debt slave master. At that point, when you control all your time, you will have achieved real wealth!