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Profiting From The Compound Effect In Your Life

Profiting From The Compound Effect In Your Life

Whether you like it or not, the compound effect is at work on your life at all times. You simply have the choice of whether you profit from it or use it to destroy your health, wealth, and relationships.

The compound effect is the idea that small actions build up over time. Imagine you had the choice of taking $1 million dollars right now or a single penny that doubled in value every day for 31 days. If you picked the penny, you’d have $10,737,418.24 on day 31… not a bad return.

However, the compound effect has much more far-reaching consequences than a nice story. It’s the fact that your daily habits add up to an amazing difference over time. And that’s the trap we have to avoid… and make the most of at the same time.

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The Fast Food Generation

We live in a world where most people expect instant gratification. That’s why there are so many diet books claiming you’ll lose ten pounds in just 3 minutes, and get rich quick schemes that promise you can push a button and make thousands of dollars a day.

They exist because we’ve been trained to want everything instantly. Why develop healthy eating and exercise habits when we can use a fad diet or just get the fat sucked out of us? Why work to build your wealth when you get become an instant millionaire buying a lottery ticket?

The reason is that instant gratification approach doesn’t work 99 times out of 100… or in the case of the lottery ticket a couple of million to one.

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The Real Way To Make More Money

If you want a proven formula for making more money it’s called the compound effect (also known as patience). It’s the fact that all the little actions we take will add up to big results over time.

Success is not actually about a herculean effort over a couple of months or a year. Every “overnight success” story you hear fails to mention the years spent preparing for the overnight success. The basketball player who practiced every day, the business owner who worked on their idea for years, or the property investor who spent their weekends looking for deals.

Make More Money With Very Little Effort

Results come from the small changes we make in our lives. If you want to make some extra money by starting a business, then you can quit your job, invest your life savings, and put everything on the line. Another option is to keep your job and build your business part-time until it replaces your income.

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Imagine if you decided to start a new business, invest in real estate, or invest in the stock market. If you dedicated just 1 hour a day to this new pursuit you would have invested 365 hours after a year and be well on your way. After 5 years that would be 1,825 hours that you’ve put towards building your extra income source.

Don’t think you have an hour? You can try learning on the commute to work instead of listening to the radio or cutting out an hour of TV/Internet a day. Everyone has the same 24 hours, and it’s up to you to choose where they get spent or invested.

How Your Results Compound

The time you invest in making more money will also compound. For the first couple of months with your new business, you’re not going to know anything and your results will probably reflect that. Yet, over time, you will work out which skills you need to improve and be able to focus on those.

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When Richard Branson invests an hour into his businesses, it is very different to the hour you invest. This is because he’s built years of experience and just understands business at a much higher level. However, he got there by doing his first business calls from a payphone, working from a basement, and figuring things out as he went along too.

Everyone Has To Start Somewhere

If you want to make more money, quit your job, or build a passive income, you need to start somewhere. The good news is that, with the internet, it’s very easy to get access to the information that you need and even start an online business in your spare time. All you have to do is put in your time, learn, and take action.

By deciding to start today, you will start to build up the compound effect for yourself. But don’t start chasing after get rich quick schemes or push-button solutions. Every time you change your strategy, you give up the momentum you’ve built with the compound effect.

Do your research and choose a path… then stick to it. Have patience, as you won’t start making huge amounts of money overnight (that’s just promised to sell you the get rich quick scheme). But with time and effort you can create an income that many people dream about and few people achieve.

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Craig Dewe

Craig founded Lifestyle Outlaws, with the belief that everyone should have the time, money and health to do what they want with life.

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Published on January 8, 2021

How To Pay Off Credit Card Debt Fast: 7 Powerful Tips

How To Pay Off Credit Card Debt Fast: 7 Powerful Tips

Ever wondered whether your credit card debt is the reason you’re in a bad financial situation? You can’t enjoy any fun activities because a good chunk of your money goes toward debt payment. Heck, you’re even behind on some of your monthly bills.

The effects of clumsy debt management are too many to list here. This guide is going to help you discover how to pay off credit card debt fast and start chasing your financial goals.

Debt problems are the last thing anyone wants to encounter. But things can get out of hand when all the “little debts” you take accumulate in interests.

What if you knew some simple and proven ways to be debt-free quickly? Implementing them would mean better financial health for you. It becomes possible to free up cash for your “wants.” These include taking a trip or buying something you’ve always desired. All that while paying your bills on time!

Let’s not wait any longer. Here are 7 powerful tips for paying off credit card debt fast:

1. Pay More Than the Minimum Credit Card Payments

Many people only pay the monthly minimum on their credit cards. Truly, that’s the right amount for staying on good terms with your credit card company. But you need a different approach if you’re looking to achieve financial independence within a short time.[1]

Most of your payments go toward interest costs when you only pay the minimum amount. A substantial sum of your balance remains standing. As a result, it becomes more expensive to eliminate your debts.

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You don’t want to wait more than 10 years to get rid of debt while it’s possible to do it sooner. All you have to do is double that $100 minimum payment to $200 or go higher.

The good thing is that minimum credit card payments are affordable in most cases. By paying a higher amount, you reduce your interest costs, lessen your borrowing period, and boost your credit score.

2. Start With High-Interest Credit Card Debt

If you have more than one credit card debt, prioritize putting the extra money toward the ones with the highest interests. This debt pay-off strategy, known as the debt avalanche method, is essential for being debt-free quickly.[2]

First, you need to list down all the credit card debts you have in the order of their interest rates. Next, you choose the one with the highest interest and pay a significant amount toward it each month. It can be an amount twice or even thrice larger than the minimum payment.

At the same time, you make monthly minimum payments on the other debts. Their interest charges won’t be as costly as that of the first debt on your list. You only move on to the next high-interest debt after the first one is gone. Remember that your focus is on the interest rates and not the balances.

3. Revisit Your Budget

Budgeting is useful for tracking your financial moves. Once you create a budget, some tweaks along the way can make it work for you better. One situation that requires you to revisit your budget is when you’re struggling with debts. It might hurt a bit to slash some expenses. But you also don’t want to miss out on achieving financial freedom in the long run.

You can reduce some variable expenses to free up more cash for credit card debt payments. They’re the ones that change from time to time. Some examples are groceries, fuel, and clothing.

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Other opportunities for cutting down your spending lie in non-essential expenses. Instead of dining out all the time, you can cook at home more to save money. You can also share some subscriptions with friends and pay a fraction of the cost.

If you’re determined enough, you can eliminate all your unnecessary expenses and focus on paying off your credit card debt first.

4. Avoid Using Your Credit Cards

Do you want to know how to pay off credit card debt with a low income? One simple way is to stop using them. Having your credit cards everywhere you go means that you’ll be more tempted to buy unnecessary stuff. In this case, you spend money that you don’t really own and get deeper into debt.

The quickest fix to stop the debt build-up is spending with cash. You’ll be more aware of everything you can afford at any particular time. If you decide to keep one or two cards to ease the transition, always make wise choices. For instance, only use them when experiencing financial difficulties.

It’s best to categorize your fun activities under “discretionary spending” in your budget. This way, you won’t need more debt to kill your boredom. By halting your credit debt from accumulating, it’s easy to pay down what you already owe and be happy with the progress.

5. Start a Side Hustle to Boost Your Income

You’re probably turning away a lot of money by not monetizing your skills. Everyone has something that they’re good at doing. And you can use that to generate extra income for attacking your credit card debt.

If you look around your neighborhood, you can find several side hustle opportunities. It can be pet sitting, tutoring, or lawn mowing. You can start an online business by offering services such as digital marketing, content creation, and web development. Such skills go in high demand on freelance sites and job boards.

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Finding clients on social media is also a good strategy to utilize your skills and make more money. Facebook groups, Quora Spaces, and subreddits are some places to look for side jobs. You only have to join a niche-specific platform, share your services, and respond to any opportunities.

It’s possible to learn a skill, practice it, and earn from it. Use the free resources online or purchase some e-courses to get started.

6. Sell Your Used Items for Extra Cash

Starting a side hustle isn’t the only way to generate extra money. You can turn unwanted items into cash for paying off credit card debt. Whether it’s an old TV, book, or furniture, there is always someone itching to buy your used stuff.

A garage sale, as much as it’s old-fashioned, is perfect for getting your neighbors and passers-by to buy from you. You keep all the money because there are no business permits or taxes involved. While you may not make much cash, it’s better than leaving your stuff to go defunct in your storage.

Other than that, you can sell your used stuff on online marketplaces. Facebook groups are great places to start if you want quick approvals and hence sales. You only have to ensure that your listing follows Facebook’s commerce policies.

When selling any pre-owned items online, ensure they’re in good shape to avoid problems with your buyers.

7. Know When to Seek Help With Your Debt

Asking for help with your credit card debt can be challenging to do. But letting it drown you is a road you don’t want to take. While you may feel embarrassed at first, it’s the best way to get back on track when you run out of options.

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There are tons of non-profit credit counseling organizations that can offer you free guidance on how to escape the debt trap. An example is The National Foundation for Credit Counseling. They simply review your finances and help you determine the source of your financial problems. After that, they match you with an actionable debt management solution.[3]

In extreme cases, the debt solution can be:

  • Debt relief – where your debt is partially or wholly forgiven
  • Debt consolidation – taking out one loan to repay others
  • Debt settlement – the creditor forgives a significant portion of your debt
  • Bankruptcy – legal process for seeking relief from some or all your debts

It’s necessary to carefully weigh your options before deciding on the way to go. Find out how it might affect your credit score and any other risks.

Wrapping It Up

Debt is a major setback when you’re trying to prosper in life. Paying off credit card debt is essential if you want to reach your financial goals. That means having more free income, a good credit card score, and even a chance to retire early. You become more productive each day because of the peace in your mind.

So, you now have some tips on how to pay off credit fast. Go ahead and get rid of that good life progress killer!

More Tips on How to Pay Off Debt

Featured photo credit: rupixen.com via unsplash.com

Reference

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