3 Tips to pay down your debt now

The road to riches is not always where you might expect to find it.

There a few excellent writers who have written on this topic and I find myself to be greatly in agreement with them.

One of them is the Millionaire Next Door by Thomas Stanley in which he claims that wealth is not always found in the neighborhood with all of the fancy expensive houses, fancy expensive houses come with fancy expensive mortgages, the neighborhoods where most “millionaires” will actually be found is more likely to be lower or middle class where you would find young professionals or blue collar workers that live within their means, generally have much smaller mortgages and don’t have to be in the constant battle of keeping up with the Joneses.

There is a lot to be said about living within your means and I think we are or have been all guilty at some point of our lives of wanting to be a part of a world to which we don’t belong and as such as we spend and spend and spend to try to live up to the dream of being a member of the select club of the rich and famous.
The credit or debt hangover that you will find yourself when you come to your senses is much worse than that which is caused by a cheap bottle of wine; it also takes much more than a day to get back on your feet.

Frugality as its merits and at such deserves to be considered.

Here are a few tips that can help you get started….

The $500 test

Scrounge $500 from somewhere, anywhere, and leave it your bank account (do not use credit or else you defeat the purpose of this exercise). Don’t touch under any circumstance, with time you will sleep better at night knowing that it’s there. Be able to keep $500 in your account is the absolute minimum requirement to getting on the road to financial success. The challenge is to keep that $500 in your account no matter what happens and to try to gradually add to it as time progresses moving forward from $500, to $1000, then to $2000, and maybe reaching $5000…. Wow, can you imagine yourself with $5000 in your account? Well it starts with being to keep that first $500.

Pay down your debt

Make a list of all of your debts. Round up all of your credit cards, cut up every single one of them with the exception of one. Pay down the ones with the lowest balance first, making larger payments in order to try to get them paid down as soon as possible, and move up the list until you’re done. This process could last a few years and it requires discipline and a very strong will but again it is possible for you to achieve your dream of being debt free. What you need is to make the decision today that you are going to pay down your debt systematically and do so until you are done.

Start a savings plan, become a thousandaire

If you want to be rich whether it be a thousandaire or a millionaire, you have to start saving some money. The more you save, the richer you will be. I don’t think that I’m revolutionizing the world by making that statement but saving is key.
Automatic savings plan where $25 / $50 / $100 /$200 are ripped out of your pay without you ever having the chance to see it or spend it are the absolute best for those that are having a hard time putting money aside for savings. The general rule is, if it’s in the account, it’s going to be spent. So don’t leave it in the account, transfer it to another account that’s not linked to your bank card, invest in a GIC or something where you will gain a little interest. If you’re a Canadian you should consider putting it in a TFSA (tax free savings account) you can put up to $5000 a year in your TFSA without any penalty and for most of us $5000 is plenty.

There is an interesting article that refers to this that was written by Liz Pulliam Weston for MSN Money

Here is a little excerpt from her article

“… Among the most important decisions you can make on your way to real wealth is choosing the right neighbourhood — but it's not the neighbourhood you might think.
The neighbourhood you choose can have a powerful impact on how rich you become and how wealthy your children will be.

But the link between where you live and how much you're worth may be different than you expect…"

http://money.ca.msn.com/savings-debt/liz-pulliam-weston/article.aspx?cp-documentid=22621667



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Joey Perugino
Conseiller en financement hypothécaire
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