How to Start Being Wealthy without Being Rich: Lose the Credit Card Debt

Rich and wealthy are not synonymous. Rich people who spend their entire income or more are not wealthy. People who live below their means are wealthy no matter how little they make. They have saved for emergencies and know the pleasure of giving generously. With that in mind, however, it is impossible to build wealth and debt at the same time. The road to wealth requires reducing or eliminating debt and building savings. That's easy to recognize but hard to do. It will take a great deal of planning and determination. Fortunately, the process breaks down into into steps.

First, you must know what you spend. Your monthly bills are easy enough, but you also need to keep track of variable expenses like groceries, and particularly cash outlays like snacks


Second, you need make a plan to change some of your spending habits. Maybe you're shocked to learn how much you spend in vending machines. Maybe you realize that you only watch a few channels on cable and you can change to a less expensive plan. Maybe you can plan your errands so that you put fewer miles on your car. Perhaps you can walk or take the bus some places and not use the car at all. Examine all of your spending and be very honest with yourself

Third, calculate how much you save with your spending reductions and apply it to getting out of debt. And if you pay no more than the minimum due on your credit cards, you'll never get out of debt! Pay the minimum plus the service charge, plus, as soon as possible, all of the new charges since your last payment.


Fourth, add up all of your debts (except the mortgage) and decide how much you can devote to debt reduction. Allocate enough to the smallest bill to pay it off as soon as possible. When that one is paid, add the same amount to the next smallest bill, and so on until you are out of debt.

Fifth, begin to save, even if it's only five dollars out of every paycheck. If you have your check deposited directly into your bank, you can have the bank put most of the money into your checking account and a certain amount into your savings account. Once you're out of debt, add what you had been spending on debt reduction, or most of it, to your savings and investments

You have begun to build wealth once you have gotten rid of your debt and devoted significant money to savings. The more you accumulate savings, the better prepared you are for emergencies. You should also look for ways to give to some worthy cause. Among other reasons, regular giving will make you less anxious about money. For a more detailed look at getting out of debt and building wealth, read How to Get Out of Debt and Build Wealth.