21st Century Academy

Eliminating Debt Quickly

In today’s western world, growing personal debt is growing at an extraordinary rate. Let me rephrase that to bad personal debt. As consumers, many of us have fallen into the trap of instant gratification. We want things now, paid on credit. I think we now now that this exercise is unsustainable and can destroy your life.

The first step to eliminating bad debt, is to stop accumulating any more. Do you actually need that new Plasma TV, or would you just like one because everyone else has one? Do you need that second car that just sits in the driveway most of the time? You get the picture, focus on needs, and leave the wants until you can pay with them with cash.

If possible, consolidate your debts under one loan, providing that the interest rate is lower than the average of your existing debt. Pay off as much as you can each time you are paid. If you have separate loans, pay off the one with the highest interest rate first, and then go down the line.

Remember that debt, especially credit card debt, is a trap that is pushed on to us by the banks and lenders. It is in their best interest for you to have as much debt as possible, as they will make their profits from charging you very high interest rates. It takes a complete mind shift to say to your self that you will not live like this any more. Unwise credit use has got the world to today’s Credit Crisis, and if we take personal responsibility, we can break away from the bad debt way of life.

Once you have escaped the bad credit trap and eliminated your debt, it’s time to get yourself some good debt. That will be the topic for my next post.