[Willie]

I met a gentleman about two years ago who buried in debt. I was surprised as he was a single guy with a high income. Truly, is not that difficult to get into debt. And this young man learned this the hard way. To make the story easier to tell, we will call this gentleman Joe.

Joe works as a contract manager for a recognized firm in New York City. At the time, he had an income of 75k a year. After taxes he was making 65k. In a month he made $5,400. When Joe came to me for help with his debt he was 150k in debt. The first step I took to help Joe was to create a list of his expenses, to find the root cause of his problem. Looking at his expenses, we saw the following:

Rent: $3,000 (Joe lived in a beautiful apartment in midtown Manhattan)

Utilities: $700 (Average)

Car Payments: $650 (Joe drove a nice 2005 Mercedez Bens CL S500)

Food: $800 a month

Although, just in regular expenses Joe was not spending all of his income, just these expenses summed up to $5,150 a month. Then I asked about his lifestyle and what kind of expenses did he usually do. From here, we found that this was what it causing the problem. Joe bought at least $300 in clothes a month. He was a very social person, therefore, he spent around $500 per month going out on weekends. Although he did not use his car much on weekdays, he spent around $200 in gas a month. Also, he took 2 vacations per year to different exotic places in the world. Now let's add this up:

$3,000 Rent
$700 Utilities
$650 Car Payment
$800 Food
$300 Clothes
$500 Social Gatherings
-------------
$6,150 Total

You would ask yourself how did Joe manage to spend $6,150 a month on $5,400 a month income. The answer is: CREDIT CARDS! Yes, that easy. Most of us, at some point, have over indulged ourselves with the credit cards. We tend to forget that the money is not money in our pockets and spend it anyways without realizing that at the end of the month at least a minimum payment is due to the creditor. Especially around these seasons of traditional, gift-giving holidays people run their credit cards through the machine until the magnetic strip cannot be read no more.

If you are someone like Joe or at some point has over spent using your credit cards without being aware at the moment that this money needs to be paid back, do not feel bad... you are not the only one. However, if you are doing this and have not realized that is time to change, then you need to feel bad. A change needs to be made!

Stay tuned for part 2, where I tell you how Joe got rid of his debt and became happy and debt free!