I want you to take a good long look at your debt. Do you really know what it costs you to be in debt? Are you thinking that you can handle it or is it getting you down?

Once you start really analyzing your debt position and the cost (to yourself) of having the debt, the results can be mind-numbingly shocking.

Ive found that debt is a lot like smoking. When you start out, you believe youre in control and you can quit at any time. As the months and the years roll past, this initial belief does not fade away. With every debt you incur, the mantra I can afford this, repeats itself in your subconscious until you wake up one morning and realize that youre in over your head.

Debt has well and truly caught you in its trap. Debt has become a bad habit.

And just like any bad habit, debt requires as much hard work and discipline to shake. The first step in the process is to acknowledge that you have a problem - instead of turning a blind eye, hoping it will go away or thinking that youll get around to it some day in the future.

One of the motivators to setting your feet on the path to debt free living is to look at the real cost of that debt. What is it doing to you? Where does it hurt the most?

Most debts (the ones that make you cry into your morning coffee anyway) are the ones that are incurred for a period exceeding one year. Youve probably seen or heard advertisements that go something like this:

Buy your Wiggly Snoogle for this special one time limited offer today 24 easy monthly instalments.

Beware this is where you can fall into the deadliest trap of them all. The interest rates are usually above average and youre stuck into a long term contract. Yes, getting your Wiggly Snoogle with the 25 000 features sounds like a good idea because of the easy monthly payments; especially if you compare it to the one time lump sum payment. (By the way, using the lump sum to monthly payment comparison is a well known sales technique to separate you from your hard earned cash.)

Lets take this out of the realm of philosophy with a real world example:

You borrow $ 10,000 to buy a new car. Over a 48 month period thats 4 years of monthly payments you will be paying an additional $ 2,000 in interest. So, your $ 10,000 vehicle is actually costing you $ 12,000. The cost of that debt is a whopping $ 2,000. If you had taken that $ 2,000 and invested it over the same period, it could have grown to $ 3,000. Instead, it has disappeared into someone elses pocket never to be seen again.

This is where the lenders make their money. The longer they can have you in their clutches, the longer they can smile all the way to the bank and you groaning on the way to work.

Now Im not saying that you shouldnt have a car its just an example of the REAL cost of debt. Sometimes debt is unavoidable, but as a species weve become too complacent about debt and we jump into it without thinking.

Your Magic Plastic (a.k.a. Credit Card) is another one of those fiendishly sneaky evils the banks developed to rid you of your money. If and thats a big if you manage your credit card correctly and pay off the full amount at the end of each month, they can be great to have and smooth the little rough patches in life. But most of us only pay the minimum amount required each month and thats exactly what the banks want. It leaves you in the red and owing them money. Which gives them ample opportunity to apply the thumb screws. Remember, every month youre in the red, youre paying interest on the outstanding amount which gets added to your bill.

The big mistake we all make is to look at our monthly statement and say: Hey, thats not too bad. I can still afford my repayments. And I have some credit available to buy that wiggly snoogle as well! The problem arises when you battle to make your income stretch through the month because of the various different repayments you have to make.

Its critically important that you start looking at the TOTAL COST of your debt over your lifetime. Once youre over the shock and horror of how much of your hard earned cash is going up in smoke, youll be in a position to tackle the problem head on and take the path to debt free living.

Remeber: Bad debt is a bad habit.