Reducing Personal Debt - Start with the Credit Cards

Hi there,

Today we are going to talk about debt. Yes, the dreaded word and that silence before everything comes crashing down. But debt and what it stands for, is very different to debt in reality. Most importance is awareness of debt in our lives and the coping strategies we can use to drive it down!

In most people's lives, we end up buying a house, might not be our dream house but well something over our heads so we don't get wet at night. Not everyone can afford to buy a house and pay it off in full, therefore I would assume the biggest debt a person could have personally, as in personal debt, is a mortgage. So if we had say a list of bills to pay and we didn't know where to start, I'd start with the mortgage. And then we'll move on to the utilities bills and so on. But coming back to debt, we can't avoid it. Somehow, we will realize that we need to borrow some money from the bank. In other times, we WANT to borrow money from the bank. That is sometimes used as gearing to either positively or negatively direct an investment. Today we will not look at that but look at the inevitable situations of debt we find ourselves in.

Sometimes, I like to reflect on how much we spend and how much of what we spend is really ours. Credit Cards, Car Loans, 500 day no interest finance, Home Loans, even 24hr overdrafts for a "emergency before the weekly cheque from work arrives". If only I had managed my money better! That's what we all say when it is too late..

Reducing debt starts BEFORE debt builds up. And like a clogged hose, we don't know how much pressure is accumulated. But we definitely know when it bursts. Look at your spendings on shopping, are you really buying all you need? Or just what you want. A credit card is a wonderful and horrible tool both in one. I personally enjoy my credit cards, yes cardS with a capital "S", but I can tell you and you probably could as well, that the temptation and ease of spending of a credit card can be addictive. The problem we all face is that the bills are paid at the end of the month, and when I look at the bills, I am sometimes shocked at the total amount of my "small spendings". They can really add up to be A LOT.

Challenge yourself and keep your cards home when you go out. Refuse to earn the points you were so promised by the companies. And if you were short on cash, you might just realized you had them all along, but were spending them before they even got into your bank account.

"People who always seem to have money, also know how to save money" unless you are that lucky and blessed. There is some truth to this statement and it really makes cents (sense).

All the best in achieving your financial dreams and keep going, keep saving to be prepared for a better opportunity may come your way tomorrow.



Jonathan

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