Turning Debt Into Wealth

Posted on 27. Nov, 2011 by in Wealth Essentials, Your Wealthy Life

Turning debt into wealth

If you are having issues with debt this year then now is the time to sort it out. There are many things that you can do to help yourself get out of debt and start saving some money for your future.

Calculate

The first thing that you should do is to work out how much you owe and who you owe it to. This could be your monthly expenses sheet where you work out what is going out against what is coming in. Figures suggest that if your outgoing are 20% or higher of your income then you are entering the danger zone.

Budget

Now that you are aware of how much you are paying out of your monthly income you can draw up a budget to schedule when you are going to pay your debts and how much you can afford to pay back. Once you have done this you will need to be disciplined and stick to your budget. Don’t borrow anything else as there is no point ‘robbing Peter to pay Paul’.

Daily Allowances

If you are going out somewhere on a night out or a shopping trip then take a set amount of money and leave your cards at home. This way you are not tempted to purchase things on your credit cards or take more money out of the bank while you are out. If you are out shopping or socialising then taking extra money out of an account is easy to do and then you forget about it until it is too late.

Direct Debits

Most companies, particularly the energy and utility companies allow you to pay via direct debit, some credit cards do too. This is the easy way to pay and some companies offer rewards if you use this method of payment such as a percentage discount or money back at the end of the year, etc. The added bonus of using a direct debit is that you are aware when the payment is due to come out of your account so that you check that you have enough funds in the account.

Change Things Around

If you are having difficulty with debt then perhaps you could change your credit card suppliers. This is relatively easy if your credit rating has not yet been affected by debt. Look online for cards that offer lower interest and 0% balance transfers, these cards may help you in the short term while you pay more on other debts.

Switching your utility suppliers around could also save you money. Don’t just look at the cheap deals that are on offer now, think of the future and how things may go up as well as down.

While chopping up your credit and store cards may be an option, these could be needed in the future for emergencies so think about it before taking drastic action. Perhaps try giving them to someone who will not give them back to you no matter how much you beg for them.

If you are trying to get out of debt then you have to realise how bad your situation is before you can find ways to get yourself out  of it.  look for ways to change the things you do and little by little you will see the change for yourself.

This is a guest post by Alan from Payplan

Image by Daveybot

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8 Responses to “Turning Debt Into Wealth”

  1. krantcents

    28. Nov, 2011

    Taking action even in a small way helps reduce debt. Make it a priority and make it automatic.

    Reply to this comment
  2. The Jenny Pincher

    28. Nov, 2011

    It can be a big relief to have a clear understanding of your debt so you can start changing your financial situation. Paying off debt is about consistency and staying focused. Setting financial goals for yourself can actually be rewarding and keep you motivated. And just think, once the debt is paid off you can start saving that money to build wealth! What a great feeling 🙂

    Reply to this comment
    • Marissa

      28. Nov, 2011

      I totally agree. A lot of people dont want to know that type of situation that they are in, but there the power of knowledge is amazing. How can you work to make things better if you dont know what type of situation you are in.

      Reply to this comment
    • Money Cactus

      28. Nov, 2011

      Realization is key to taking action. It is such a great feeling to pay off debt and free up money to use in constructive ways. Sometimes people forget after a while and get caught in the debt trap again, it can be a nasty cycle.

      Reply to this comment
  3. Not rocket science is it? Cut spending and target your debt. At some point learning a new skill may help in increasing income.

    Reply to this comment
    • Money Cactus

      28. Nov, 2011

      Agreed, it is really simple. Unfortunately I think people don’t appreciate the simplicity of it and end up getting carried away with all the things they want, or trying to keep up with everyone else.

      Reply to this comment
  4. Direct debits are fine and a good way of not forgetting the payment but a warning about credit card recurring payments which appear to be the same but aren’t. They have to be cancelled by the payee – you can’t cancel them yourself.

    Even if your card number changes, the account number (that you don’t see) remains the same. Even if you cancel the card, the card company can still come after you. So beware! Automation is all very well but recurring payments authorities can be a virus in your wallet!

    Reply to this comment

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