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Monday, May 2, 2011

Pay Off Your Bad Debts

Pay Off Your Bad Debts
Did you know that Billionaire Donald Trumph has once owed millions of dollars? One day when he passed by a beggar on the street, he realized that the beggar (which had zero net worth) was richer than him (negative million dollars in net worth).

That realization fueled his desire to pay off his debts.  The experience gave him the confidence to be able to build his billion dollar empire today. While I have run into debts myself, it has certainly not reached millions yet.  But just the same, the experience has made me realize one thing. Getting into debt is easy, but paying for it is really, really hard.

I've read it somewhere that when you realize you've dug yourself a big hole (e.g. huge credit card debts), the first thing you need to do is to STOP digging (in my case, to stop using my credit card, period.)I wish I could say I stopped immediately upon realizing this. Unfortunately, it just wasn't the case.

It took me quite some time to finally decide to stop using my credit card. Month after month, I would find myself in front of the ATM doing another cash advance to have the money to pay for rent. Until one day, I decided enough is enough.  The stress of dealing with the credit card debt was killing me.  I decided to stop using my credit card and finally pay off my debts no matter what it takes.

How To Pay Off Your Debts

Theres are a lot of ways to pay off your debt but the first thing is to decide to pay for it, no matter what it takes.  Here are 3 suggestions to help you pay your debts off faster.

1.  Pay more than the minimum

Did you know that the newly passed Credit Card law in the U.S. requires issuers to disclose how many months/years it would take to pay off the entire balance if you pay only the minimum? The answer in most cases, is a long, long time.  This is not surprising.  If you pay only the minimum, most of it will just be enough to pay off the interest and a little bit to pay off some of your balance.  It will be to your advantage then to pay more than the minimum each month, so that whatever is left is used to reduce more of your balance, not just interest.

2.  Earn more money

Another way to pay for your debt is to look for any "sideline" business or add jobs that will earn you extra money.  Then use that extra money to pay more off your balance.   When I was in debt, I tried doing some programming projects for friends.  I even entered the world of network marketing, tried selling wellness products and failed miserably. I remember that my only "downlines" (a term indicating those you've recruited into the business) was my mother, my aunt, and a few of my friends. While my ventures were not big successes, the extra money I earned certainly strengthened my resolve to earn more money so I can pay my debts sooner.

3.  Owe money from less people

The good book says, "the debtor is a slave of the lender".  The more people you owe money from, the poorer you get. If you owe  money from 5 people, decide to completely payoff at least one of them. Once you are able to pay your debts to one person, go on to the next.  Talk to your creditors and map out a plan.  It may take you longer to pay them. But being honest and upfront about your situation will go a long way in reassuring them that you are not going to hide from your debts.  Once you have a plan mapped out, stick to it.  Don't give up.  Persevere and the sweet taste of freedom will soon arrive.

Mark the day you completely pay off your debts as your freedom day! If you are holding a lot of credit cards, have all of them cut off except for one and decide to pay your balances on that card in full every month going forward.

More importantly, give yourself a big pat in the back!  You deserve it. Congratulations! Go celebrate and stay debt free.

Rich Money Habits

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