Posts
America is drowning in debt. In 2004, Americans bought items on credit
that totaled over $2 trillion! Currently, Americans carry over $700 billion in revolving credit each month. That’s up from $50 billion in 1980. Consumer debt for Americans is now averaged at approximately $7,100 per person, not including home mortgages. These are staggering statistics. For many families, debt has become a crisis. Vast numbers of people have adopted faulty reasoning when it comes to purchasing goods and services. A debt mind-set says: “If I can afford the payment, I can afford the item.” What many people are discovering is that they cannot afford the item or the payment.
Credit card companies are notorious for luring in new customers with low rates, and then raising those interest rates to astronomical levels when a payment is late or missed. Credit card companies and banks can raise your interest rate even if you are late paying an unrelated bill. They can simply declare you to be a credit risk, thus justifying a higher rate. Remember the Rule of 72. Just divide the percentage of interest you are paying into 72 and you will find the amount of years it will take for your debt to double. At interest rates of 18 percent and beyond, the time debt takes to double is very short. It is clear that financial success can never be achieved while paying exorbitant rates of interest due to debt. Eliminating debt must be a priority if you are to gain control of your finances. Here are several key steps that will lead to your freedom from debt. First of all, you must make a commitment to stop buying on credit. I highly recommend you undergo “plastic surgery.” By that I mean you cut up your credit cards. If you lack the self-control necessary to cease buying on credit, you must get rid of your ability to do so. Cut up the cards. Many people argue that they must keep at least one card for such necessities as hotel and airplane reservations, gas purchases, and so forth. Many banks now issue debit cards that will accomplish all of these matters, and the money is drawn directly from your checking account as opposed to being placed on a line of credit.
If you have the discipline to use a credit card and pay off the entire balance each month, then you may find it an advantage to do so. In essence, you are using the credit card company’s money as a free loan for 28 days. You must pay off the entire balance within the grace period or finance charges will obliterate this financial advantage. Secondly, if you currently have consumer debt, you must adopt an aggressive strategy to pay off those bills.
Every extra dollar you can find should go to paying it off. Have a yard sale, get a part-time job, or develop a home business, and focus your attention like a laser on paying off that balance. Once that bill is eliminated, move to the second smallest and do the same. You will now have the added resource of the money previously given to the debt you have paid off. In this way you will move through your debt, building larger payments and greater momentum as you go. Do not stop until every debt on your list is paid. Dave Ramsey in his best-selling book, The Total Money Makeover, describes the benefit of a “Debt Snowball”: “The reason we list smallest to largest is to have some quick wins. ...
Face it, if you go on a diet and lose weight the first week, you will stay on that diet. If you go on a diet and gain weight or go six weeks with no visible progress, you will quit. ... When you start the ‘Debt Snowball’ and in the first few days pay off a couple of little debts, trust me, it lights your fire. I don’t care if you have a master’s degree in psychology; you need quick wins to get fired up. And getting fired up is super important.” Lastly, most debt can be avoided if we learn to live within our means. That takes self-control. Self-control is an absolute fundamental for wealth,growth, and freedom. Commit today to control your spending. Refuse debt. Begin today and you will be one step closer to the dramatic wealth-building opportunities that come when you are debt free.
Like this article?
that totaled over $2 trillion! Currently, Americans carry over $700 billion in revolving credit each month. That’s up from $50 billion in 1980. Consumer debt for Americans is now averaged at approximately $7,100 per person, not including home mortgages. These are staggering statistics. For many families, debt has become a crisis. Vast numbers of people have adopted faulty reasoning when it comes to purchasing goods and services. A debt mind-set says: “If I can afford the payment, I can afford the item.” What many people are discovering is that they cannot afford the item or the payment.
Credit card companies are notorious for luring in new customers with low rates, and then raising those interest rates to astronomical levels when a payment is late or missed. Credit card companies and banks can raise your interest rate even if you are late paying an unrelated bill. They can simply declare you to be a credit risk, thus justifying a higher rate. Remember the Rule of 72. Just divide the percentage of interest you are paying into 72 and you will find the amount of years it will take for your debt to double. At interest rates of 18 percent and beyond, the time debt takes to double is very short. It is clear that financial success can never be achieved while paying exorbitant rates of interest due to debt. Eliminating debt must be a priority if you are to gain control of your finances. Here are several key steps that will lead to your freedom from debt. First of all, you must make a commitment to stop buying on credit. I highly recommend you undergo “plastic surgery.” By that I mean you cut up your credit cards. If you lack the self-control necessary to cease buying on credit, you must get rid of your ability to do so. Cut up the cards. Many people argue that they must keep at least one card for such necessities as hotel and airplane reservations, gas purchases, and so forth. Many banks now issue debit cards that will accomplish all of these matters, and the money is drawn directly from your checking account as opposed to being placed on a line of credit.
If you have the discipline to use a credit card and pay off the entire balance each month, then you may find it an advantage to do so. In essence, you are using the credit card company’s money as a free loan for 28 days. You must pay off the entire balance within the grace period or finance charges will obliterate this financial advantage. Secondly, if you currently have consumer debt, you must adopt an aggressive strategy to pay off those bills.
Every extra dollar you can find should go to paying it off. Have a yard sale, get a part-time job, or develop a home business, and focus your attention like a laser on paying off that balance. Once that bill is eliminated, move to the second smallest and do the same. You will now have the added resource of the money previously given to the debt you have paid off. In this way you will move through your debt, building larger payments and greater momentum as you go. Do not stop until every debt on your list is paid. Dave Ramsey in his best-selling book, The Total Money Makeover, describes the benefit of a “Debt Snowball”: “The reason we list smallest to largest is to have some quick wins. ...
Face it, if you go on a diet and lose weight the first week, you will stay on that diet. If you go on a diet and gain weight or go six weeks with no visible progress, you will quit. ... When you start the ‘Debt Snowball’ and in the first few days pay off a couple of little debts, trust me, it lights your fire. I don’t care if you have a master’s degree in psychology; you need quick wins to get fired up. And getting fired up is super important.” Lastly, most debt can be avoided if we learn to live within our means. That takes self-control. Self-control is an absolute fundamental for wealth,growth, and freedom. Commit today to control your spending. Refuse debt. Begin today and you will be one step closer to the dramatic wealth-building opportunities that come when you are debt free.
Like this article?
Facebook
0 comments:
Post a Comment