Tackling tough times is a lot like dieting. To lose weight you must increase activity and reduce calories. During economic downturns you have to similarly increase savings and reduce enjoyment, which is to say, expenses. So here are some specific types of debt you might want to address:
Credit cards – Understand the difference between 0% interest and a truly paid off balance. Zero interest is a sucker invitation to a game where the odds are slanted in someone else’s favor. Don’t think that just because you’ve moved a debt from one to another lender that you’ve paid off this debt. You have paid off a creditor who will now send you three, new, pre-approved credit cards, hoping you’ll become desperate enough to use them. And you probably will.
Mortgages – If possible, don’t have a mortgage. Consider investing in a light-weight camping tent instead. But if this isn’t an acceptable option, are some alternatives:
Rent out your media room and apply the proceeds to your house payment to more rapidly pay down the home mortgage. Trust me. This will be one of the best returns you’ll ever get on that space.
Reverse your thinking. Sell or rent out your first home and live full-time in your second. Use the sales or rental proceeds to reduce any debt on the vacation quarters. If nothing else, this will prevent your relatives from borrowing your lake house.
If you don’t have a second home and you can’t afford your first, go live with your children or other kin. They’ll likely float you the funds for your next dwelling.
Automobiles – Don’t trade in your gas hog for something more fuel-efficient. You will get more money by disassembling the older vehicle and selling it off in pieces as used auto parts.
Replace your second car with an electric golf cart. This mode of transportation is safer than a scooter and it uses even less gas—because it’s battery-powered. You might, however, have to allow extra travel time to reach your desired destinations.
Don’t, under any circumstance, buy a pickup truck. Friends will only expect you to loan them your vehicle or to help them move. In either case, they will be using your precious $4+ per gallon gasoline.
College loans – Tell your kids to make good grades because they’re going to need them. Explain clearly to your offspring what their choices are: They can finance their own education or provide your retirement home. If they seem “on the fence” about this, mention that you’ve recently had some trouble with incontinence.