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5 Tips for Getting Out of Debt (and Why)

5 Tips for Getting Out of Debt (and Why)

When young people are first starting out in life, either as college students or young workers, debt looks like an easy solution to the shortage of money that seems to go with this period of life. It’s only a temporary fix, however, and will set a person back in the long run. Suze Orman, in The Courage to Be Rich, points out the outrageous amount of money that is paid on interest over the years with credit cards and other debts. She and other financial experts offer some tips for getting out from under.


1. Know about your credit cards. When you get the bill, look it over until you find the APR (annual percentage rate), which is the interest rate. Credit cards sometimes list other percentages and fees, but the APR is what will get you in the end. List your cards from highest to lowest APR. For instance, put that 27% interest card first, and the 0% cards last.

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2. Work from the top down. Pay as much extra as possible on that top card each month. Make minimum payments on the others. When that highest card is paid off, start the process with the next card on the list. Carry out this procedure until all the cards are paid off.

3. Round up. For speeding up the time it takes to pay off your mortgage, simply add a few dollars each month. Those dollars are applying to the principal, and even a few dollars a month can trim years off your debt. One idea is to round the amount up to the nearest ten.

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4. Emergencies? Experts disagree about the wisdom of keeping one low interest card on hand for emergencies. Frankly I think it makes some sense, but Dave Ramsey, author of The Total Money Makeover: A Proven Plan for Financial Fitness, says No. He says you should perform “plastic surgery” on those cards and cut them up. The bottom line is how you define an “emergency.” If it’s seeing a great deal on something you’ve been wanting, like a new guitar, maybe, but you don’t have enough money to cover it right now . . . well, that’s not really an emergency!

5. Keep it empty. If you do keep one card on hand for convenience or whatever, the best policy is to always pay it completely every month. Otherwise you are actually living beyond your means. Orman describes that lifestyle as living a lie. It’s been said that many people “spend money they don’t have on things they don’t need to impress people they don’t like.” Think about that statement and see if it applies in your own situation.

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An old classic success book is Success Through a Positive Mental Attitude by Napoleon Hill and W. Clement Stone. These authors listed seventeen principles of success, of which one was what they called “O.P.M.” This acronym refers to “other people’s money.” They advised borrowing money to invest in one’s own business efforts, and then thinking positively so that money would grow. It’s an interesting idea. What do you think?

References:

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Ramsey, Dave. The Total Money Makeover: A Proven Plan for Financial Fitness

Orman, Suze. The Courage to Be Rich: Creating a Life of Material and Spiritual Abundance.

Hill, Napoleon and Stone, W. Clement. Success Through a Positive Mental Attitude

Barbara Wood is a writer and educator living with her family in the Missouri Ozarks.

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Last Updated on July 13, 2020

How to Plan Your Life Goals and Actually Achieve Them

How to Plan Your Life Goals and Actually Achieve Them

Where do you want to be 5 years from now, 10 years from now, or even this time next year? These places are your goal destinations and although you might know that you don’t want to be standing still in the same place as you are now, it’s not always easy to identify what your real goals are.

Many people think that setting a goal destination is having a dream that is there in the far distant future but will never be attained. This proves to be a self-fulfilling prophesy because of two things:

Firstly, that the goal isn’t specifically defined enough in the first place; and secondly, it remains a remote dream waiting for action which is never taken.

Defining your goal destination is something that you need to take some time to think carefully about. The following steps on how to plan your life goals should get you started on a journey to your destination.

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1. Make a List of Your Goal Destinations

Goal destinations are the things that are important to you. Another word for them would be ambitions, but ambitions sound like something which outside of your grasp, whereas goal destinations are certainly achievable if you are willing to put in the effort working towards them.

So what do you really want to do with your life? What are the main things that you would like to accomplish with your life? What is it that you would really regret not doing if you suddenly found you had a limited amount of time left on the earth?

Each of these things is a goal. Define each goal destination in one sentence.

If any of these goals is a stepping stone to another one of the goals, take it off this list as it isn’t a goal destination.

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2. Think About the Time Frame to Have the Goal Accomplished

This is where the 5 year, 10 year, next year plan comes into it.

Learn the differences between a short term goal and a long term goal. Some goals will have a “shelf life” because of age, health, finance, etc, whereas others will be up to you as to when you would like to achieve them by.

3. Write Down Your Goals Clearly

Write each goal destination at the top of a new piece of paper.

For each goal, write down what is it that you need and don’t have now that will allow you achieve that goal. This could be some kind of education, career change, finance, a new skill, etc. Any “stepping stone” goals you removed will fit into this exercise. If any of these smaller “goals” have sub-goals, go through the same process with these so that you have precise action points to work with.

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4. Write Down What You Need to Do for Each Goal

Under each item listed, write down the things that you will need to do in order to complete each of the steps required to complete the goal. 

These items will become a check-list. They are a tangible way of checking how you are progressing towards reaching your goal destinations. A record of your success!

5. Write Down Your Timeframe With Specific and Realistic Dates

Using the time frames you created, on each goal destination sheet write down the year in which you will complete the goal by.

For any goal which has no fixed completion date, think about when you would like to have accomplished it by and use that as your destination date.

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Work within the time frames for each goal destination, make a note of realistic dates by which you will complete each of the small steps.

6. Schedule Your To-Dos

Now take an overview of all your goal destinations and make a schedule of what you need to do this week, this month, this year – in order to progress along the road towards your goal destinations.

Write these action points on a schedule, you have definite dates on which to do things.

7. Review Your Progress

At the end of the year, review what you have done this year, mark things off the check-lists for each goal destination and write up the schedule with the action points you need for the next year.

Although it may take you several years to, for example, get the promotion you desire because you first need to get the MBA which means getting a job with more money to allow you to finance a part-time degree course, you will ultimately be successful in achieving your goal destination because you have planned out not only what you want, but how to get it, and have been pro-active towards achieving it.

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Featured photo credit: Debby Hudson via unsplash.com

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