‘A man in debt is caught in a net’ – wrote John Ray.
Molehills of personal debt build mountains of worry. Debt consciousness is actually poverty consciousness. You must pay up your creditors and sustain your integrity.
The solution is to come up with a repayment pattern that accommodates your regular savings as well as your repayment. I have compiled the following steps for you so that the road to the repayment of your debt will not be a boring one.
I have used these tips during the years I was drowning in debt and believe it. They worked.
So, here is it
It can be very dull and depressing, waking up every morning and working hard with the sole aim of repaying the personal debt. You need something positive to brighten your thought and instill meaning in your schedules.
If all you do is to pay up your debt and mortgage, month in and month out, then all that preoccupy your mind is debt. You tend to think about nothing else.
Remember that what you think about expands. You tend to breed other debts. And indeed, you don’t want this. All that you want is to progressively nullify the aura of negativity and bad luck that attends all debtors. You want to inch your way to positive frames. You need to imbibe this idea of paying yourself first.
Paying yourself first is essential and crucial to your financial success. I know it might sound confusing, but soon, you will get the idea.
Begin A Saving Plan
This is a classic approach that I honestly urge you to adopt; you should catch yourself beginning a saving program. Why would I start saving the program while I still owe others? I know this is the kind of question in your mind right now, but let me explain; since this blog gives you practical tips and not just a set of theories, you will get it soon.
Of the 100% that constitute your income
You pay yourself the first 10%; this is your saving
55% will go to buying things you need
5% will go into your play account
20% will go to repaying your loan
10% will go for charity, or tithe or whatever you believe it’s a right course
I know 10% to charity sound awkward to some people in debt, but believe me, it works wonders. I will encourage you to read my article on 10 Little Known Ways To Get Out Of Debt Fast.
Another crucial step towards repaying your personal debt is to make a comprehensive list of all the people and organizations you owe. Always remember that they love you and trust you, and that was why they loaned the money to you in the first place. You need to figure out the amount you can afford to repay each of them per month, based on a fair, even, and just distribution.
At this point, you will need to talk to each of them after you have carefully mapped out the repayment pattern. Be very honest and considerate with yourself and with them. You will need to be prepared as some of them may welcome your plans and thoughtfulness, while a few others may be disagreeable and needier. You must be friendly but stick to your project.
Tell each of them to the effect that, ‘this much I can repay you each month, but no more.’
Reduce Personal Debt By Buying In Cash
Since the most important thing is to pay your debt. You will then need to stop further credit purchases. Buy only in cash and stick to no more than 60% of your total earning.
The 10% saved will grow and continue to serve as menthol, a source of motivation, a reason to endure, and a valuable tool for perseverance. It removes the bitterness and emptiness always inherent in all repayment patterns. You will then do the extra job on your past expenses to ensure that you now buy only what you need, and not merely what you want.
The Bottom Line
Confucius said, “He who will not economize will have to agonize.”
And the great Calvin Coolidge wrote that “I favor the policy of economy, not because I wish to save money, but because I wish to save a life.”
In September 2005, I started a new business. A friend had procured material worth sixty thousand Naira from a man on credit on my behalf. My earning then was about ten thousand Naira per month.
The business wasn’t moving as projected, and the merchant wants his money. I went to the man and told him that I could only afford to pay him four thousand Naira per month, based on my income at the time. We keep to the agreement. At the same time, I put away 10% of my earning as retained income or savings. Within 15 months, the merchant was paid off, and I then transferred the merchant’s established monthly pay to my savings subsequently.
The savings proved to be more valuable than worth. It grants me the needed confidence in myself. I derived a feeling of security as well as limitless hope, and a sense of preparedness for any opportunity for advancement.
I discovered that there is always a much higher pleasure in running up a saving that I never wished to spend than the pleasure derived from spending it.
Over To You
So, what is the other advice, tips, strategies, techniques, or methods that have worked for you? Please share it with us in the comment below. I sincerely value your opinion more than mine.