Living the American dream has left many Appleton residents in debt. With the turn of the economy, many people are now realizing that debt is not good as they struggle to pay their debts. In a society that models instant gratification, many people are now learning the art of sacrifice in order to eliminate debt or at least reduce it.
One grad student has mastered the art of sacrifice. After graduating college with almost $35,000 in student loan debt, the student took drastic measures to get out of debt. With that in mind, the student moved to Alaska and took a job where room and board were provided. After two and a half years, he was debt free. However, that was not the end of his sacrifice because he had grad school in mind. Instead of getting into more student loan debt, he decided to save money by living out of his van. He spent most of his time at the school library and showered at the gym while returning to his “home” at night. It was indeed a sacrifice but apparently it was well worth it to be debt free.
Eliminating debt is not impossible if there is a willingness to sacrifice by decreasing one’s standard of living. Living at or above one’s income is a sure way to get into debt. As a general rule, mortgage or rent should not exceed 28 percent of the gross monthly income, including principal, interest, taxes and insurance. Additionally, a person’s total debt to income ratio should not exceed 36 percent. This percentage includes the mortgage, credit cards, student loans and all debts that are paid on a monthly basis. For some people facing overwhelming debt, no amount of sacrifice can help to eliminate debt if the money is not there to begin with. In those cases, a Chapter 7 bankruptcy can help debtors to eliminate debt and obtain a fresh start where they can begin to follow these debt ratio principles.
Appleton residents can look into eliminating or reducing their debt by making a few sacrifices that may decrease their standard of living. However, for those residents that are facing financial challenges, Chapter 7 bankruptcy may be an option for eliminating debt. A bankruptcy specialist can help individuals to determine if bankruptcy is right for them.
Source: Yahoo Finance, “Duke grad student secretly lived in a van to escape loan debt,” Mandi Woodruff, June 10, 2013