6 tips on how to get out of your debt

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I have recently read Robert Kiyosaki’s book “Rich Dad’s Guide to Becoming Rich“. It’s a great book with a lot of practical advises and financial tips on how to get rid of your debt and how to educate yourself financially.

I like his books because they are very easy to understand for everyone who doesn’t have a financial education. The biggest part of his advises can be applied immediately in our daily lives.

Here is an extract from the book that I think it’s very easy to apply for everyone and it can be a great 1st step in taking control over your own finances:

Pay yourself first. Put aside a set percentage from each paycheck or each payment you receive from other sources. Deposit the money into an investment savings account. Once your money goes into the account, DO NOT take it out until you are ready to invest it. Congratulate yourself! You have just started managing your cash flow.

Focus on reducing your personal debt.

Tip #1: If you have credit cards with outstanding balances, keep only one or two credit cards in your wallet.
Keep the other cards out of sight, preferably in a safe or a safety-deposit box.

Any new charges you add to the one or two cards you now have must be paid off every month. Do not incur any further long-term bad debt.

Tip #2: Come up with 150$ to 200$ extra per month.
Now that you are becoming more and more financially literate, this should be relatively easy to do. If you cannot generate an additional 150 to 200$per month, then your chances for achieving financial freedom may only be a pipe dream.

Tip #3: Apply additional 150 to 200$ to your monthly payment of ONLY ONE of your credit cards.
You will now pay the minimum PLUS the 150 to 200$ on that one credit card.

Pay only the minimum amount due on all other credit cards. Often people try to pay a little extra each month on all their cards, but those cards surprisingly never get paid off.

Tip #4: Once the first card is paid off, apply the total amount you were paying each month on that card to your next credit card.
You are now paying the minimum amount due on the second card PLUS the total monthly payment you were paying on your first credit card.

Continue this process with all your credit cards and other consumer credit such as store charges. With each debt you pay off, add the full amount you were paying on that paid-off debt to the minimum payment of your next debt. As you pay off each debt, the monthly amount you are paying on the next debt will increase.

Tip #5: Once all your credit cards and other bad debt are paid off, continue the procedure with your car and house payments.
If you follow this procedure, you will be amazed at the shortened amount of time it takes for you to be completely debt-free. Most people can be debt-free within five to seven years.

Tip #6: Now that you are completely debt-free, take the monthly amount you were paying on your last debt and put that money toward investments.
Build your assets.

That’s how simple it is. Β πŸ™‚

Good luck to all!

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