From Debt to Wealth
The bad news: You have debt.
The good news: You have debt.
I know it’s hard to believe that debt is good news for anyone other than the credit card companies and their customers. (Don’t you wish you spent your money buying their stock instead of paying them interest?)
But there is, in fact, a golden light at the end of this tunnel and I’ll show you what it is, as well as how you can get there.
Here’s how it works. Each month you’re paying and paying on your debt. And if you’re like most of us, your balances seem to stay pretty much the same, or maybe even go up instead of down. But in a way that’s good news. Why? Because you’ve already disciplined yourself to pay that fixed amount each month. So if you can pay off your balances, you will have freed up a significant chunk of money that you can turn into wealth – often even more quickly than you thought possible.
Let me give you an example. A few years out of college, when I first started working in the credit education field, I found myself with about ten grand in credit card debt. For a young working person, that was a lot of money, and paying the bills each month got pretty depressing. But when I worked my way out of that credit card hell (in about 18 months) suddenly I had all this “extra” money I was able to save and use to boost my retirement funds. It felt like a windfall!
The same principles that worked for me then can work for you too, so let me tell you how they work:
1: Fess Up
So take some time now to write down all your credit cards, what you owe, the interest rates and your monthly payments. I know this may be a scary step for you, but hang in there. There’s still that light at the end of the tunnel to work toward!
2: Create Your Plan
That’s where a pay-off plan comes in. Once you have your list of debts, then it is time to create a plan for paying your debt off as quickly as possible. Most people do not pay their debts in the most effective way. But the right plan can literally save you thousands of dollars!
An accelerated payment plan allows you to turn the tables on your credit card companies. These days, with penalty fees, universal default, and all kind of other traps, it can be hard to stay ahead of the credit card companies. A rapid repayment plan shows you how to pay your debts back in the most efficient and least-expensive way possible, and because you have a clear debt-free date, you’re more motivated to succeed.
The beauty of a do-it-yourself solution like this is that it’s confidential, you don’t have to cut up your credit cards, and once you get started you can create tremendous momentum.
Here’s an added bonus: As you start paying off your debt using a rapid repayment program, your credit rating may improve. Better credit means lower rates on your debts, and may lower your insurance premiums too. That means even more money in your pocket to pay toward your debts!
3: Turn Your Debt Payments Into Wealth
After your debts are paid off, you can start saving and investing the money you’ve been throwing away on monthly payments. And it can add up quickly.
For example, let’s say you’ve been paying $350 a month on all your credit cards. When you pay them off, you start investing that same amount of money with a 5% return. In five years, you’ll have almost $25,000, and in ten you’ll have over $55,000! Would you rather be paying that $350 a month, or investing it?
The Bottom Line
Those are the basic three steps: Fess Up, Create Your Plan, and then Turn Your Debt Payments Into Wealth
If it’s that easy, why is it so hard?
In a minute I’ll talk about the four major obstacles consumers have when they come to me for advice: high interest rates and minimum payments, too many monthly expenses, and not enough income to get ahead. But first, let me tell you what you need to succeed: a clear plan and the support to make it happen.
Problems and Solutions
Problem 1: Your interest rates are too high
If you can’t get your rates down and you’re not able to make headway on your debt alone, consider talking with a counseling agency about a debt management plan.
Problem 2: You can’t afford the minimums
Problem 3: Your expenses are too high
Problem 4: You don’t make enough
A high credit score often equals savings on loans and credit cards.
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