Just a short note on getting out of debt. Most financial advisors say that we should álways pay ourselves first, that is save at least 10% of our income monthly. After saving 10% we should then seriously strive to increase it to 15%, and then to 20%, and then to 30% as we get into our middle age. We should really be saving 10% for short term purposes and another 10% for long term purposes, for our retirement – which together makes 20%, and then strive to increase it to 30%. But… experts say that we should first really focus on paying off our debts. We should be paying between 20-30% off on our debts monthly, in order to redeem it as soon as possible. Cut all expenses drastically until your bad debt is payed off. Bad debts are those things that decrease in value the moment you buy them, instead of increasing in value like in most property. Bad debt not only decreases in value, but usually it increases through the interest being added to it monthly.
After you have redeemed most of your bad debt, you should start saving up to 30% of your income (the same percentage you previously payed to bad debt), and learn to live on only 70%. This is crucial – that is to learn to learn to live on only 70% of your income! If you are a Christian and you tithe – which is an excellent practice, you should learn to live on even less. The more money you make, the more you should save, and not spend more! When your financial prosperity increases, stay within your usually middle class spending habits and dón’t start to spend more money. Sáve more money! Build up a surplus, or a money tree and watch it grow steadily over time. When we really start saving, the first two years is not so difficult. But after three to five years we are sorely tempted to spend our savings on something – dón’t! If you keep on saving, you can be well away after five to ten years, and after ten to twenty years you can be relatively rich!
Most people stress that you should first pay off your debt before you start saving, because of the high interest you pay on debt, versus the much lower interest you get on savings. But the fact is that most people will always have some sort of bad debt, and if you don’t start seriously saving somewhere, you probably never will! There you have it – it is not rocket science. Apply the above principles and it wíll work for you. Getting out of debt and building wealth is not difficult, but it takes absolute discipline! It takes a plan of action to achieve financial freedom. Financial discipline and self-control is within your grasp. Táke control of your personal finances todáy!