So you’re in debt, aren’t you these days? We live in a society that encourages people to borrow. Credit card ads tell us to travel to Jamaica whether we can afford it or not. (This is the purpose of your golden card, right?)
The loan broker wants us to borrow up to 125% of the equity. Even the federal government has only the first budget balance of a generation and now faces the daunting task of repaying more than a trillion dollars in debt.
However, not everyone is in debt. Many people know how to handle money. Their debts are manageable, and they have money in the bank. Sounds great, isn’t it a bank deposit? That’s what you deserve. To get there, you have to think a little about money and learn new ways to handle money.
Why are you in debt?
Debt-free people think and treat money differently than we do. They know about money and debt, things that don’t make the rest of us immune. We call them “culturally literate.” If you can connect with money, such as money, you will enter a life that is debt-free and prosperous. What we hope to do in this book is to show you some of their secrets, so you can tweak some ideas and tools to help you get out of debt.
Don’t feel too sad if you’re no good with $ 1 assets. Many people aren’t. The school does not teach money skills, and often parents are busy getting out of their own financial difficulties to help them. Unfortunately, for many of us, we learn more money from our parents than anywhere else. The good news is that learning from debt and improving financial knowledge isn’t that complicated.
The first step in the process is to figure out how to generate a lot of debt because if you don’t know how and why to use this kimchi, you can get out of debt, but you definitely won’t stay. Therefore, the first question to ask yourself is, why do you need to be in debt at all?
Sometimes guilt is inevitable, but it isn’t. When money is tight, you have several options. It is easiest to have debt. Maybe you decide not to choose more debt, but decide to work overtime and make more money, or you can tighten your belt and spend less money. Debt isn’t your only option.
People are in debt for many reasons: some are good reasons, some are bad. It doesn’t matter if you bought a luxury product that you otherwise can’t afford? Is illness or divorce making you financially difficult? Is debt your way of coping with other sudden, unexpected expenses? When looking at the reasons for getting into debt, it’s important to pay attention to whether your consumption habits follow a certain pattern. If you can see a pattern, you need to address that pattern and possible debt.
Consider Mark and Diana. Both lead a good life: he is a psychologist; she is a psychologist. They have two children, and they are committed. They both sent them to private schools at a total cost of $ 15,000 a year. Both children went to summer camps. These costs are correct.
Mark and Diane do not buy luxury goods, do not travel much, and are very careful with the children’s costs. The only way they can pay all their debts is through debt. They use equity lines and credit cards to make ends meet. Although they want to move to a cheaper neighborhood, they cannot do so because their homes have no property rights and are in trouble.
What should they do? If they want to pay off their debts, certain things in life will have to change. Private schools will have to leave, camps may have disappeared, or they will have to make more money. You too. If you want to get out of debt, you need to determine why you are in debt and change this behavior or method.
Bad debt and bad debt
Debt in itself is not a bad thing. We were both (authors) able to start our own businesses because of debt; Steve started his own legal business, and Azriela started his own entrepreneurial consulting firm. Hence, we understand what debt is and why some debt is major.
With debt, you can do things you normally wouldn’t be able to, such as start a business, go to college or buy a house. Debt is used to build buildings and finance investments and entire businesses – even the government is financed with debt. The trick is to build up debt that will help your career and get rid of useless debt. Not all debt is bad debt.
Debts that can help you and enrich your life are manageable and not a burden. They can be called “good debts.” For example, if student loans allow you to complete your studies and further achieve your life goals, then that’s good debt. If you leave medical school to become a writer after a year, it will be a heavy debt. Helping Debts; hinder bad debt. We want to help you get rid of bad debt.
Other examples of debt that can be considered good include:
1. Home loans. A mortgage can be a heavy debt. Not only does it enable you to own your own home, but it also allows you to establish your own home value. People skilled in finance can receive interest and equity. People who are not skilled in finance pay interest and earn money for others. For example, charging for groceries means you pay about 17% interest in a week on the goods you consume. People with financial knowledge will never do that.
2. Car loans. A car loan can be considered good debt because you can get a long-term income from the debt. If you need a good car to work (you are a real estate agent, for example), then a car loan can be considered good debt as it will benefit your career. However, a car loan you can’t afford is a bad debt because it hurts your life.
3. Commercial loans. If you can pay back the loan and help you make more money, that loan is good debt, but if the loan is just a source of trouble for you, then the debt is bad.
4. Credit card. The credit card is great. They are convenient and easy. They can fund businesses and even medical emergencies. You may know only too much. Their problem is that they fall into their sirens too easily and go through your head unconsciously. From then on, they started to harm your life more than help.
Bad guilt Bruce
How do you know if your debt is good or bad? Easy. Overdue debts cause stress. You don’t sleep well because of them. They started a fight and made it worse. Supreme Court Judge Lewis Powell was asked to define obscenity. After struggling to find a definition, Powell famously said the phrase, “When I see it, I know.” The same can be said about bad debts: I know when I see it, and it must be obscene.
It seems that the bad debts cannot be paid back. If you bill for things you don’t need or borrow things you consume quickly (like clothes, meals, or vacations), you’re in bad debt. Things quickly disappeared, but debt has a stubborn habit that seems to last forever. Interest and fines can turn bad debts into bad debts. For example, if you buy a CD player for $ 200 but haven’t paid it off at the end of the year, your credit card company charges a high-interest rate of 20% per annum (20% per annum), you are in late 2002 $ 220 owed. A year. Doing this with five items will owe you $ 1,100, which is a lot of money.
Money can let go of ghosts.
Is money tight? Here are some easy ways to cut some extra costs: Don’t use ATMs at other banks to avoid the $ 2 usage fee; cancel the movie channel on the cable and save about $ 20 a month; put all your change in a jar. Save about $ 50 a month; run a garage auction and earn about $ 200; cancel your phone and save $ 50 a month.
When you agree to pay crazy interest rates charged by some creditors, you can have bad debts because the debt seems to be growing exponentially. Credit cards are the culprit but by no means the only one. High-interest rates can also come from personal loans, business loans, or unpaid taxes.
You’ll know what a bad debt dance looks like, and anyone reading this book will do this: Before you clear out last month’s bill, a new bill will come. You are surprised that the phone bill has still not been paid. The dentist somehow never sent a check. You know what a late cancellation looks like. Your Visa and MasterCard invoices include late payment charges. The hardware store will send you a letter to inform you that it is overdue and ask you to send the check immediately. There is a month left after the money is used up, and the payday seems far away. The worst part is that these things no longer surprise you.
Prevention is a common response mechanism to address fiscal imbalances. The thing is, it can cause more problems than you already have:
Your property can be taken back. A financial company can come and collect your car. The electronics store can get the TV back. You can be sued. If this happens, your wages may be withheld, or your bank account charged. Imagine being surprised when you take $ 1,000 from your checking account to pay for a mortgage and find yourself confiscated by a creditor.
You can have a lien on your property. Failure to pay the bill means that the creditor can pass judgment on you and force you to pay later if you sell the house. Only then can you pay at 10% interest per year.
Loss of service. If you don’t pay these bills, you could lose insurance or utilities.
But just as you have avoided trouble, the truth is that your guilt has not diminished or given hope. They are just a problem; there is a solution. Only after he or she realizes and admits that there is a problem, can the problem be fixed. You have started doing this since reading this article. As you read, you should start developing a debt reduction plan that works for you. It would help if you determined which debts are necessary and which are not.
The debt you want to keep
One of the authors of this book, Steve, is a bankruptcy attorney. One day, an old friend Bill came to his office and said he needed some help getting out of debt, but he also wanted to avoid bankruptcy as much as possible. They talked, came up with an action plan, and Bill moved on. About four years later, Steve met Bill again and asked what was going on. Bill told the following story.
Bill was saddled with $ 30,000 in credit card debt, and when he left Steve’s office, he owed his mortgage for two months. That day, Bill finally decided that something needed to be changed. He wants to pay everyone back, save some money, and keep his house. His mortgage is his biggest and favorite debt because he loves his home.
Bill’s priority is to prioritize debt. Wanting to save his house, Bill called his lender and discovered a plan that would allow him to delay the mortgage debt until the end of the loan term. This allows him to keep his major debts and focus his energy on getting rid of debts he no longer wants.
The bill establishes a payment plan for the credit card. He started living frugally, making some money by moonlight, and paying more money with a credit card than the lowest. He is hardworking but not always perfect. Although it took him several years, he was finally off the debt. He also kept his home and even created a small nest egg. Bill did, so did you.
Getting out of debt
If you want to thrive economically, many debts must be cleared. The most obvious are those where you pay high interest and penalties, such as credit cards, lines of credit, taxes, or other debts much higher than inflation. In this article, you will see how to plan to get out of this heavy debt. However, when considering this plan, you should also prioritize certain debts and pay them back on time:
1. Rent or mortgage. Make paying rent or mortgage your top priority. Payments on equity or second mortgage lines of credit are also essential because you could lose your home if you don’t pay.
2. Auto payment. Payment. If you fail to do this, the car will be taken back.
3. Water and electricity costs. These services are important, and invoices usually incur heavier late fees.
4. Child support or support. Failure to pay these debts could put you in prison.
5. Taxes. If necessary, the tax payment can be temporarily delayed, we’ll show you how to do this later in the book, but if the IRS is about to collect your salary, bank account, house, or another real estate, you should plan.
The first law of holes: stop digging!
The purpose of this article is to help you get rid of the debt in life. You are not asked to make fundamental, unreasonable changes in your life because this rarely works. On the contrary, important, sometimes gradual, small but important changes can bring about big changes.
If you want to start paying off your debts, you need to quit the debt. If you think this is part of the problem, start to cut milk from the credit card nipple. You don’t have to cut all credit cards; that would be impractical and unreasonable. Start slow, but grow gradually. You can do it. The only way to stop debt is to stop the debt. You better start now because the sooner you start, the sooner you will get out of debt. The longer you wait, the longer it will take.
We’ll show you how to easily (well, almost easily) cut your budget, so you don’t have to go into more debt to make ends meet. But start now. You will have to stop sooner or later. In retrospect, this is one of the most important steps for you to get out of debt. You will thank you for your gift. Remember the first rule of holes: stop digging!
Now is the time to think about your long-term financial outlook. What do you hope to achieve by getting rid of debt? Do some habits change?
Pay off your MasterCard? Maybe you really want a stress-free life without money problems. But you can have more. Losing debt is one thing, but prosperity is quite another.
You have read this book and will reread it in this book: If you do nothing else, change your thinking and the way you handle money, you can pay off your debts, but you don’t want it. If you do make a few simple changes in your thinking and behavior, you can not only get rid of the debt burden, but you can also be successful. You get what you deserve: a fulfilling life.
The least you need to know
1. It makes economic sense to have a basic debt, not for non-essential goods.
2. Not all debt is bad debt.
3. You may want to keep the debts that extend your life and get rid of other debts.
4. Stop increasing your debt immediately.
5. Develop a long-term action plan.