How To Really Get Out Of Debt
Philanthropist and multimillionaire Sir John Templeton was asked the secret to his great wealth. Templeton shared one thing, give. Find causes and people in need and regularly give to them. (He recommended donating at least ten percent of your earnings.)
Anthony Robbins shares that to get ahead financially you need to find great joy in contributing to others. He also adds that you must spend less than you earn and invest the rest. Without making intelligent investments most people are losing money due to inflation alone.
Radio host and author Dave Ramsey shares that there are a few steps to being financially free, which means paying off your debts and having enough money to live the life you want.
His first step; establish a $1000 emergency fund. At the same time stop using credit cards, and use this fund only in agreement with your spouse for real emergencies.
You should be able to get this fund together within a month by saving, cutting costs, and selling items online or in garage sales. The only other thing to remember is that once funds are used, all extra spending stops until you get the emergency fund back up to $1000.
The next step Ramsey shares is the snowball effect. You begin to pay off your credit cards and loans by paying more than the minimum payment each month until one loan is paid off. Then you use the previous payment from that loan and add it to the payment on the next loan. You continue doing this until all your debts are paid off.
This is an odd step for many people, and it was a challenge for my family as well. Most of us pay off a loan and then want to celebrate by spending the “extra” money we now have. In truth, there is no “extra” money until the next loan (and the one after that) is paid off. However, this truly works as long as you stay focused.
Where do most Americans lose money? One of the main places is restaurants. Everyone deserves a special night now and then, but for many this habit costs far more than they realize.
A second major drain is buying a car that costs too much in comparison to one’s salary.
It is well known that 95% of couples whose marriages ended in divorce shared that stress over debt and arguments about money were a main cause of the demise of the relationship.
Consider for a moment the staggering implications. More than 90% of people get married. When one understands that the first cause of most problems is debt, and almost everyone gets married at some point, it is easy to see why getting a grip on finances needs to be a top priority.
Once you pay off your debts, the next step almost every financial expert recommends is to become educated and regularly read books on money.
And lastly, remember that true abundance comes in recognizing one is already wealthy, as we each have much to be grateful for every day.