Your greatest investment - Pay off your debts

Invest in Yourself – Pay off your debts

One of the things I have said so far is that, “if you are to have a chance to succeed in the strategy of leveraging your time for money, you must do something that you love, you must find that “profession” that will fulfil who you are and then commit your heart to it. You must Invest in Yourself, nurture and develop who the You inside truly is.

One of the greatest investments that you can make into your own life is to pay off your outstanding debt.

 

Paying off your debt

Those who have spent time with me know what my stand is on debt, irresponsible and unnecessary debt (what I term Unintelligent Debt) - we will revisit what we mean here.

If I've said it once, I've said it a thousand times,

STOP BORROWING, STOP LIVING BEYONG YOUR MEANS AND trying to impress others who don’t love you, with money that you don’t havE.

PAY OFF OR DOWN WHAT YOU HAVE AS EXISTING DEBT!

 

This is your only powerful remedy to the “payday to payday” marathon that never ends, where one is only ever working to get paid so that they can cover some of the debt that have existing, with new debt that they commit to. Paying off your Debt is the only remedy you will ever have to a long prosperous and peaceful life.

Here's a hot tip in case you are just tuning in to this discussion: If you are in the 33% tax bracket that I am, and you currently have a credit card, and a retail shop card where you are typical paying only 15you’re your credit card balance, this is the same as earning less than 50% before taxes. And you wonder where your money goes to each month?

With their low minimum payments each month, credit card companies, and retail store cards want you to think that it doesn't really hurt you very much to owe them money, that the convenience of swiping these cards everywhere you go and looking all prim and rich to those standing in line besides you, qualifies or justifies the high fees that you end up paying. That is the greatest fallacy.

Truth is that “The less you contribute each month to pay off your debts, the more that you will ultimately end up paying and the longer it will take you to get out from under that heap of debt stress that you are currently suffocating under”

Making minimum payments on a typical E10, 000 card balance at 20% could cost you more than E20,000 in interest by the time you clear off your debt. Your total cost could be more than three times as much as you initially borrowed. And it could take you years to pay it off. That is even if you ever attempt to get to the point where you settle.

Ask anyone who has ever been face to face with a shylock. They charge you 20% per annum minimum, and make getting the money so easy that you don’t even think about the cost. Then you start paying it off and the real nightmare begins.

If you borrowed 10 000, each month they charge you interest of E2,000 so that by month 5 you have an outstanding debt of over E20 000. Within a year, if you are successful in honoring your debt, which is possibly not the case, you would have repaid over E30 000 for an original debt of E10 000. What exactly are you doing?

This on its own, is a very long dream that we hardly awake to, for most of you never actually push to settle but continue to run month on month on debt, such the outstanding amount ends up becoming so huge that you end up contemplating suicide – yes, some go that far. See, to get the mind to understand how a mere E10 000 debt, ends up being E40 000 by year end is hard for anyone. Worse still - if you couldn’t afford an upfront of E10 000 where do you imagine you will get the E40 000 that you ultimately need to have paid to settle?

Do not get caught up in the debt race

Do not therefore get hooked on easy money that gets you to stop asking the relevant questions. Stop the act of being desperate for cash such you take it from anywhere, without so much as a clear plan on how you are to repay it. I implore you, beat those plastic mongers at their own game, and pay off your balances as fast as possible. Even a few extra emalangeni a month will yield a big return. For example, just adding an extra E50 a month to the minimum payment on that E3,500 in charges will save you more than E2,000 and over 10 years of payments!

Here's the best long-term strategy: Stop charging items that you can't pay for or don't actually need to have. Stop trying to impress people who chances are Ill say again do not even care about you. Do you really want a new hairdo or bag that will wind up costing you three to four times as much as what you couldn't afford in the first place? Especially if your old hairstyle or shoe is still humming along? I hope your answer will be no!

If you become a dedicated student of life and finances as I am, if you learn to hold and plan before you spend, and only spend on the things that you truly need and have budgeted for (we will discuss budgets soon), you are bound to be in a position to save a lot of money and be that much closer to financial freedom.