HOW TO STOP DEBTS FOR GOOD?

Stop Debt for Good

There are two types of debt, the good and the bad. But many of us are victims of bad debts than good debts. Good debts are debts that can generate income or debts that used to leverage money for another business. Bad debts are debts that are generated by expenses like buying wants not need like cell phone, iPod, TV, cars, clothes for the seek of luxury. Many people are like that, when they see a new laptop or new model of cell phone they will buy it without thinking if it is a need or want. Need is something which you can’t live without like house, good kind of clothes or a car. It might confuse you but car is a necessity, so it is a need but when you buy a new car even if you have a car already because you just like it then it is not a necessity anymore but only wants. You just like it! Another thing is when you buy, make it sure that it generates money like for example you buy a laptop and then you blog so you earn money but if you just buy it to play solitaire and chatting with friends then it is luxury.

Some of the experts says that don’t buy anything if it will not earn you money. In fact laptop will consume money every month because of Internet connection and electricity bills. I am not telling you that you have to follow my advice but if you are really serious on eliminating debts for good, you have to evaluate on how you spend your money.

1.0 My first advice is to stop using your credit card. Credit card can spend you lot of money without knowing. You will tend to depend on it until the time that you realize you have already a mountain of debts. If you have debt already, stop digging the well. Credit card can be good also especially if you are in business and you travel a lot. It is convenient and you can use it for emergency like hospitalization in times of accident. You can also use credit card when you travel. It is a cashless way of paying tickets, hotel reservation or you can buy items online using it. Another uses of credit card is when you try to finance your business by approaching a bank. Bank gives more preference to anyone who used credit card. The bank might think that you are a good payer and it is easy for them to deduct or get your money using your credit card information. Credit card can help you when you loan especially if you have a good record.

2.o Be frugal and save money. There is no substitute to being a saver. It follows that if you are a saver, you tend to avoid debts as much as possible. This is a way to have a self discipline in terms of money handling. But my advice again is control your urges in spending not in investing. There are many people who are good savers but bad investors. Since they want to make it sure that they don’t want to lose the money, they tend to keep it in the bank and afraid to invest it thinking that they might lose the money through investing. The best thing to do is to do your homework, study the business or investment first before you dive into it. The best thing to do is to find a mentor and study how he or she became rich. You need also to study the market. Many of us don’t like to do it because it means invading our privacy and we want to stay in our comfort zone but the reason why we are not in our comfort zone is because we want or we stay in our comfort zone. Meaning if you don’t grow, there will come a time that what we call a comfort zone will no longer a comfort zone because the market is changing and the world that we live before is no longer exist in the present or in coming future.

3.0 Find an extra income or look for other income generator to add in your monthly take home salary. Don’t depend in your monthly income from the company where you work. I appreciate your loyalty to the company but to be honest, you should also do something to yourself. What if your company will close? What if there is a downsizing in your company? It is also called as resizing, it is a good word to hear but the meaning of it is fatal. It means your company is in trouble. They want to lay off some of the employees. So the best thing to do here is to increase your earning by adding your monthly wage and the way to do it is to accept extra job or you can start a small business like a mini grocery in front of your house. You can also open poultry or maybe if you have a big backyard, you can start planting vegetables for consumption so that you can save money or if you have a big harvest, you can sell it in your local market. The point here is you should find another way of income to support your family. You need also to save at least 10% of your monthly gross income and invest it like in mutual fund or build a business. You also need to pay your insurance and social security system for pension now for later years. If you know how to manage your money then there is no reason that you will still cling on debts.

4.0 Prioritize your expenses. I always believe in planning. There are times that you need to pay the electric bill first than to buy a dress or something. There are times when you need to pay the tuition fee of your son than to have a summer vacation in your dream beach. Make it a habit of avoiding the self gratification if it is only for a moment. Go for a long and lasting happiness. Set a long term goal and always imagine it to combat temptation in buying unnecessary things which you really don’t need.

5.0 If you have present debts, refinance it with loan that has a lesser interest but before going to the bank, try to ask your friends and relatives if they could lend you money because these people will likely not ask for an interest. If you have good relationship with them, they will surely help you without any reservation.

6.0 Lastly avoid fancy things in life if they are not really needed. Cell phone for instance, I think this not really necessary because before there is no cell phone then why did everyone was ok. You can call anyone in some telephone booth if you really need to call. If you really want to have one, choose the outdated because it is cheap, what is important is you can call and text. Other feature is not that useful.

Save and invest to gain financial freedom. Saving is not enough in this time, investment is the best answer.This is how to manage your debts to be financially free.