“Don’t use credit cards to improve your credit situation”, this almost always leads people to get more debt.
Struggling to pay your debts? You’re not alone. Take a look at these tips to help you get on track and start maximizing your money. We are ending the month of January and if you still can’t pay your debts from the previous year, this blog is for you.
Nobody likes to be in debt, if you have a debt, a part of your income is running the luck of economic slavery. How do we know the beginning of the year represents a series of cyclical annual expenses, that is, we know that they occur most of the time, but there are also unforeseen expenses, in case our economy is not strong and if we do not have a savings fund in emergencies, it is most likely that we will use the credit card.
Today I want to invite you to start this 2023 by paying your debts, using your money more wisely so that it maximizes the potential of the money you earn with effort and work, using the money exactly where it helps you achieve your big goals and not just allocating it to paying daily expenses will improve your economy.
If you already have goals set for 2023 and you are working on them, you are going to require money. One of the most frequent misconceptions, when we have a project to start that, requires money is the lack of liquidity, and above all, paying your debts helps you to have a clean ground to work on those goals to be achieved. There are many myths surrounding debt. One is that debt is an excellent tool for creating prosperity. It is not. It is one of the main things that delays all times of economic success.
Money is a maximizer of your big goals and debts divert your course. Why should I pay my debts? There are good reasons why you should liquidate them and I am going to tell you three of them. Debt prevents you from saving more than you could. Debt disorients the direction of your finances. Debt increases the degree of stress and when you are stressed you cannot think clearly. For these reasons, having Economic Solvency contrary to debts, boosts your goals, everything great and valuable that you want to achieve.
I know two techniques that I share with you with which you can finally say “Today I can pay my debts”:
- Number #1 is a mathematically correct debt. Debts are paid in stages starting with the one with the highest interest rate because you are consuming more money each day. The more you owe, the more your money consumes, which is why the mathematically correct formula is to focus on the debts that have the highest interest rate.
- Number #2 is an emotional technique. When you have more than 3 debts between credit cards and personal debts, it is advisable to use this technique, you have to start paying the debts in a staggered way from the smallest to the largest. It does not mean that you stop paying large debts, you always have to pay the minimum that is requested, but when you focus on the smallest debts, you’ll have a sense of achievement that will cause satisfaction and the feeling of going on the right path, this allows you to continue walking forward safely. When you finish paying the smallest debt, with the free money you begin to pay the second while you continue with the minimum.
Let’s talk about the months without interest, although they subtract liquidity every month, it is free borrowed money, and you can choose to leave your payment until the end. If I must, can’t I save? Mathematically speaking, if you owe at a rate of 20%, you should not save at a rate of 8%, however, saving is a matter of discipline and emotion. The recommendation is to add the savings as if it were a debt to yourself, with a minimum payment, and leave it for the end (before the months without interest). So once the debts are settled, you focus that amount (with which you no longer had) on your savings. The important thing is that you begin to have small achievements that encourage you to continue paying these debts.