Who's The Daddy: Getting out of debt is like losing weight, we can all do it

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Last week yours truly was asked for some financial advice. If my dad was still alive I think he’d have died laughing.

Being an actual idiot for 30 years was both exhausting and expensive. A monthly pay check and overdraft facility was seen as a challenge. When you’re so far in the red you daren’t check your bank statement, it’s maybe time to put on your big boy pants and face reality.

Overdrafts, credit cards and loans are ruinously expensive. So are leased cars. Didn’t stop me from doing all four though, before I knew any better, and wondering where all that money went (FYI, the banks took it).

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I think we can all agree that the Covid-19 pandemic was a bad thing. However, being stuck in the house for months on end and with access to the entire knowledge of humanity on the internet (it’s not just for cat videos, apparently), did have its upsides.

We can all get out of debt if we want to. Photo: AdobeWe can all get out of debt if we want to. Photo: Adobe
We can all get out of debt if we want to. Photo: Adobe

One day I stumbled across US personal finance expert Dave Ramsey on YouTube and it changed everything. As right-wing, tubthumping Bible bashers go, his advice is as no-nonsense as you’d expect. However, it works. And he’s helped millions of people get out of debt and no longer live paycheck to paycheck.

When he says it out loud, it sounds pretty obvious. Get on a written budget, get out of debt, foster high-quality relationships, save and invest, be generous.

There’s also his 7 Baby Steps which give you a practical way out of debt so you keep more, and eventually all, of what you earn. His debt-free scream is incredibly cathartic. His videos are worth a watch. It’s the best advice you’re getting all week. https://m.youtube.com/watch?v=OO25TrVo_dU&pp=ygUWRGF2ZSByYW1zZXkgYmFieSBzdGVwcw%3D%3D

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Luckily for us, our daughters are pretty good with money. Maybe they’ve heard yours truly banging on about it for the last four years and some of it has sunk in?

They live on less than they make, they budget (took me 30 years of work, they picked it up in weeks) and they pay themselves first on payday.

When it comes to earnings, we’re bang average and always have been. None of us have ever brought home megabucks. But like the late, great investor and philanthropist Charlie Munger said, "It is remarkable how much long-term advantage people like us have gotten by trying to be not stupid instead of trying to be very intelligent."

And that’s it in a nutshell, you don’t need to be clever, just not idiotic for a long period of time. Something governments around the world would do well to note.

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Getting out of debt is like losing weight. Everyone knows how to do it. But like Dave Ramsey says, it’s only 20 per cent knowledge and 80 per cent behaviour.

Listening to Ramit Sethi was an eye-opener too. He says you only need to track four key numbers (fixed costs, long-term investments, savings and guilt-free spending) and the rest takes care of itself. He says it like he means it, and he’s right. https://m.youtube.com/watch?v=unbA3nASp6g&pp=ygUVUmFtaXQgc2V0aGkgNCBudW1iZXJz

Oh, the financial advice I was asked for. Daughter #1 had a technical question about ISAs. I think she already knew the answer but needed to hear someone else say it.

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