If you’re paying off a car, a mortgage, student loans, and that which you owe from a failed business venture, you likely don’t have much spending money. A car payment can cost $500 a month, a mortgage may be $1,000, you may have $500 in student loan payments, $400 in miscellaneous loans, and $600 in food, utilities, and lodging.
Altogether, it’s not untoward to expect a household of two parents and two children to have expenses around $3,000 a month, minimum; predicating a $36,000/year salary—minimum. You would hardly be subsisting in such a situation, and would have no backup funds. This might prompt you to get a credit card making your debt skyrocket even more.
Before you know it, instead of making money, you end up sliding deeper into debt. Meanwhile, if you can shrug the recurring fees, you can actually manage a family quite well on $36k a year; you’ve just got to be wise and thrifty. Here’s how that can work.
First and foremost, you want to find an agency offering debt relief | how to get out of debt – Debt Academy for example, to help advise you. Removing the cloud of debt—chasing it away with the winds of solid financial practices—is desirable for anyone who’s experienced a debt storm.
Now is the time to strategize based on your current spending habits. You’ve got to make a $500/month car payment? Sell the car and get out of it. Get a beater for $1,000. If it lasts a year, you just saved $5k.
It probably won’t last a year, you’ll probably end up spending around $4,000 on it unless you buy wise. Still, you would save $2,000 over the finance option. Do that every year, and you’ll save $2k annually over paying for a car every month. That’s $10k in five years, or $20k in ten.
Next get rid of that mortgage until you’ve shrugged credit card debt, student debt, and whatever other miscellaneous loans you’ve had.
Here’s a crazy solution: buy a plot of land cheap, then buy a full-sized RV with $5k of what you sold your mortgage for and park it on that land. You can find a bit of land large enough for under $3k; but it may be a little out of town. Still,
spend $1,000 on solar panels and you can have free energy.
You can find an extremely cheap motorhome nowadays—full-sized and mid-nineties around $5k if you look around. You can skirt it for a few thousand, and by $11,000 (including a solar panel system) you’re independent. If property taxes are $2,000 a year, then for $13,000 you’ve paid only $1k more than what you would have on your mortgage in the first year. From then on, all you pay is taxes, and you save approximately $10k a year.
Five years saves you $70k. Certainly a motorhome wouldn’t be easy on the family, but if your total debt were under $70k, you could get rid of everything that was dragging you down while still maintaining your $3k/month job. Without debt you’re just down to $1,000 a month in expenses, and could conceivably save up to $24k annually.
That can be money down on your next house, and you can find a better mortgage opportunity. The point here is: if you’re willing to think outside the box and take a close look at your finances, you can likely find a way to make even the least preferable situation work to your benefit. It’s better to spend five years in an RV, than thirty years in debt.