Personal Wealth Building – Getting Out of Debt
One of the most important steps in personal wealth building is getting yourself out of the bondage of debt, but you’ve probably found that this is easier said than done. What’s the quickest and easiest way to get out of debt? How do you get started if you barely have enough money to make your minimum payments right now? This article will give you a simple strategy for getting out of debt so that you can focus on your personal wealth building.
The Foundation of Personal Wealth Building
The foundation of personal wealth building always starts with making your financial freedom a priority, even over your living expenses. Of course, you still have to make sure that your living expenses are paid. But have you ever tried paying the first fruits of your earnings towards achieving financial freedom? Before you pay any of your bills, pay a certain amount of extra money towards your plan for getting your debts paid down.
If you wait until you have enough money left over after paying your expenses, you’ll never get started. So the first step to personal wealth building is making it a priority.
Before you start Getting out of Debt
Before you start putting the first fruits of your earnings towards paying down your debts, set aside $500 to $1,000 dollars just in case you have an unexpected expense. This is key to getting out of debt because most people get into debt as a result of financial emergencies. So before you start paying towards your debts and make a commitment to stop borrowing money and going into debt, make sure you have a cushion to cover you if something comes up. Once you have this, you’ll feel more comfortable putting the first fruits of your earnings towards paying down your debt.
Treat Getting out of Debt Like Investing
One of the biggest mistakes that people make when they’re getting out of debt is trying to invest money AND pay down their debt. This reminds me of the old saying: “If you chase two rabbits, you’ll lose them both.” Think about this, if you’re paying off a loan (or a card) that has an 18% interest rate, what’s the point of investing money and earning only 12 to 16%? Paying off debt at 18% is actually just as good as investing your money at 18%, because you’re avoiding paying the 18%.
So make getting out of debt a priority, set a cushion for yourself and make it your investment plan. Once you’re done, you can focus all of your energy on personal wealth building.
Find out about forming good cash managing habits…