Today I will give you a tip about the single best way to reduce and avoid debt, it is perhaps the most effective method known to man. Here it is…
“Don’t borrow any more money”
Simple enough to almost make you feel conned I bet? The fact is that debt begets debt and if you enter into a lifelong debt cycle it is something that is virtually impossible to free yourself from. The very first step towards financial freedom and a life out of debt is to realise this fact and to come up with a solution.
Some people think that if they consolidate loans that they will then have more money, but what do most of them do with this ‘extra money’? Save it? Or do they then get more debt and the extra money thus goes into the debt vortex as well?
All good ideas have an exit plan [one of the very reasons Iraq was such a terrible idea to begin with], and you can make yours. To do this you have to decide how you will go about ridding yourself of debt, will you consolidate debts into your mortgage? Take an extra job? Sell up and move to a smaller house?
Thrift can carry you quite a way, we have covered many ideas in previous posts, but we failed (unfortunately) to put the fundamental point of personal finance in black and white. If you want to be richer in the future you have to have a way to fix your debt, a plan is where you start, if you don’t then you might make 20% gains every year but still be in the red.
Living on the money you have is not always easy, but it is the only way to eventually wake up one day and say ‘I don’t owe anybody anything’.