Sometimes debt can actually make you feel suffocated financially. When your monthly register of bills is growing before your very eyes, it’s not easy to stay positive. One quickly gets discouraged when he works so hard to get out of the hole, only to find he’s in just as deep the following month. The truth is that paying no more than the minimum monthly payments will get you nowhere because the interest rates are so high. To make matters worse, after paying the minimum payments, you may have found that there is never anything left for a holiday weekend or anything that would seem to make life a bit more pleasant.
Here are a couple of great secrets! First of all, keep track of every penny you spend in a small note book, and categorize each expenditure as either a need (N) or a want (W). As you see how much money you spend on “wants” rather than “needs,” you may see a pattern emerge. Usually our “wants” out-spend our “needs” with the end result being frustration!
Start setting the ratio right by cutting out fifty percent of your clothing costs, eating-out excursions and other excessive spending habits. Use this money towards your highest interest balance due, and you’ll soon be amazed at how your monthly margins will increase. By exercising discipline, you will automatically be making more intelligent monetary choices.
This next suggestion is a bit more risky. Rather than focusing on paying off my highest interest debt, I took out a loan for $15,000, used it as an investment and then paid it back for the next three years. By that time, it had already grown by $5,000, resulting in a grand total of $20,000. I then began to refocus these sums towards items which appreciate in worth rather than depreciate.
Once the $15,000.00 was paid for, I borrowed another $15,000.00 and paid it off. Slowly margin became a reality. We learned that first we had to discover where the money was going and then direct it into things that increased in value instead of areas that stole our margin.
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