A financial healthy situation is trying to achieve financial freedom and an increase in the amount of cash that you have on your bank, because whatever amount of money your job earns is not always as important as looking at what you have left at the end of the month and how you spend it. Here are a couple of laws and helpful guidelines that if followed try to prevent or get you out of financial misery.
The Laws of Debt Solving.
1. Never lend money.
(If you want to prevent/solve debts, then lending money is forbidden under any circumstances. The rule is if you can’t buy it directly and having no money to spare then you shouldn’t buy it at all. This includes houses, cars or even vacations and other big expenses)
2. Twist every penny 3 times.
(Itâ€™s grandmother’s advice, but itâ€™s true. Itâ€™s better not to be greedy but you will have to give in when you have 10k problem or more to solve. Making a penny count 3 times its value, and thinking 3 times before you waste your money on something will ensure whether you really need this object or not.
3. Do NOT buy what you NOT need.
(You will save money by avoiding buying unnecessary things. Search for cheaper alternatives. Also try to get things second hand or for bargain prices, again only buy those things you really, really need.)
4. There is only one place where money belongs, namely in YOUR wallet.
(Itâ€™s of little use to look at other people’s situations (grass greener parable). Organise your own financial health, and make sure money flows into your wallet.
5. Do NOT invest money you CANNOT afford to lose.
If you are not able to survive the possible ‘ nightmare scenario ‘ in something that you invested your money in , DO NOT DO IT, in none of these cases you shall gambling be alright because you’ll be on the streets bankrupt. Itâ€™s NEVER worth the gamble.
6. Time erodes financial pain.
In every case itâ€™s best to pay direct, but when you have debt, you want to spread it as much as possible over time to give yourself as much breathing space as possible and buying yourself time.
7. Preventing money crisis is better then healing from it.
Once in debt itâ€™s a matter of wading through hardship to get out. Be a better person and stay out of it.
8. Positive outflow
Money is much like water in a sink. Prevent water from going down the drain by putting a plug. Therefore every money outflow is like a roof leaking water, and must be reduces by fixing the holes, and the more water (money) that is flowing in from the faucet by opening and the less drainage or leaking that is taking place, the easier the sink (your wallet) will be filled and will eventually overflow (being rich). This means that the money that comes in must always be higher then the money that flows out. Simple.
9. Shred your cred.
When you start feeling uneasy and are in a difficult financial situation and having money issues, grab the scissor from your drawer and (I mean it) cut your credit card in half. For it’s true; you must LEARN to FEEL the value of money. Ever made a big buy and noticed how easy it is to lose 5000$ or more within 1 minute from your credit card? Try drawing it from the ATM in 1 dollar bills and giving away the same amount of 5000$ going thru your hands, then you KNOW and FELT your lost money. Make sure you have a firm understanding on what you are doing financially.
10. Don’t live on big feet.
This is especially what is wrong with governments nowadays, they spend more then they have. The result? Poverty and debt (http://www.brillig.com/debt_clock/). It’s totally irresponsible, despicable and wrong. Every government/individual should have a PROFIT goal, and not shift its problems on other following governments/individuals by spending more then they can afford and putting the load on other people.
There is nothing magical about being rich or poor for that matter, itâ€™s all based on principles. Whether it be the government or an individual with debt problems makes no difference. I want to make it clear that Loving and helping people is infinite more important then money, but since so many people struggle with financial problems I say we go straight to the debt solving solutions.
The 2/3 method.
This is my personal method of debt solving. In which 2/3 of the income that you receive will go to debt solving/savings, and 1/3 to livelihood or possible investments. Obviously the bigger the debt the harder it is to get out.
Let’s start throwing some figures:
a 10k debt is imaginable, your conditions are poor and that you earn a maximum of 17k a year.
17k over 12 months is earning roughly 1400 dollar a month. Now take 2/3 of that amount that’s roughly 900 dollar a month.
10k debt divided by 900 dollars a month, will mean that you will spend a bit more then 11 months into solving, depending on what source you got your loan from, bank or possible friends/family.
Now letâ€™s imagine that you cannot afford to save 900$ each month, reduce it to 1/3 and pay off 450. This will double the time that you can pay off your bills, but wait there’s a catch. It will be almost 2 years before you have solved your 10k debt, and that’s not a place you want to be. You want to get rid of that backpack of stones on your back ASAP. Therefore in this time you have to search for additional resources/jobs (not extra debts) If you have a 40 hour job, go work black (not paying taxes) in the weekends. Of course it contains a risk but you will earn a lot of money that can help you solve your debt. This won’t damage the government because you already paid your tax with the 40 hour job. When you get caught however, this might result in quite a financial penalty so beware of that, or don’t take the risk and get a normal weekend job, or extend the amount of work that you do with your current boss to 56 hours a week.
Increasing your money range and extending the 1/3 to a higher 2/3 will result in faster debt solving.
The leaking roof.
The typical person who spends all his money has a shed full of junk that you don’t even need for livelihood. This waste of money creates gaps into your financial situation which must be secured. The money flows out to all kinds of wasteful things. I know itâ€™s not nice but every penny must be examined.
Food is a big one; we spend a lot of money on it. And can save a lot of money on it too. Candy/cookies/ice-cream everything that you feel that is unnecessary should be left out.
Calculate what you spend on food, you get a receipt when you walk out of the supermarket. Examine this every weekend, and take note of where you spend, and what can go off the list.
Almost everything runs on electricity, although itâ€™s corny and not nice. Buy yourself light saving bulbs for your house, although they cost a lot, you save your environment and you save hundreds of dollars on yearly basis and will make a profit on long term basis.
We all need water every day, if you look at the bill, you might not like what you see. Invest in water saving shower heads. Stay hygienic however. See where you can save water as it can save you money.
Get yourself a high output kettle for heating your house, this will reduce gas usage enormously, although a big investment in the beginning, it will save you hundreds of dollars on gas on the long term, its harsh and your house won’t be cosy, but maybe setting the kettle a few degrees lower and putting on some extra clothes will save you money.
What house are you living in, are you sure you don’t live in a house/apartment in which the rent/mortgage isn’t too high? You might be living in a golden cage house but not being able to do anything in your life. Could you move to an area that is close to the city but has fewer expenses too? Usually villages/towns that lie just outside the city don’t cost half as much, bring you peace and quiet, and give you all the luxury of having a big city that has everything within your vicinity as well as jobs and opportunities that can benefit your financial situation enormously. The only downfall could be the traffic jams, but if public transport is reliable you can make usage of that and will save you costs also.
-Alcohol/cigarettes/drugs/other unnecessary items
Throw these all away, when you count them up it will save you literally hundreds of dollars each month, and maybe 1k or 2k on a yearly basis which can be used to solve your debts. Forget vacation, go work during the holidays, itâ€™s a restraint but you are in a pickle so you are forced to obtain resources and money.
You probably need your car, if you don’t you should consider selling it. Gas prices and car maintenance costs can be very high; itâ€™s hard to do groceries without one however. And itâ€™s only a legit thing to do if the car costs too much, or if you are able to get to your job on your bike or walking.
All these things break in a certain amount of time, its important on all these products to do a research on. Buy a machine product brand name that is bought by the majority of the people. These are usually (not always) the most reliable and most durable. The internet is great source for pricewatching, they compare similar products for a cheaper price, however service is not always guaranteed, but you can always watch the comments of other customers that bought this product before you and view their opinion on it. Although every opinion is exactly that , an opinion, but it can be beneficial to your understanding of the quality of the product.
Throw it away and use a normal telephone, if you hardly use your cell phone the more reason to get rid of it, same counts for a TV ,although most people can’t live without one, it absorbs time & money For the typical guy that calls his wife in the supermarket to ask her what he should buy. Make a note at home with a pen instead and stop making unnecessary calls. Honestly you will find peace when people aren’t calling you all the time, and only inform you on things at home, get a cheap subscription for your normal phone, again search for a reliable provider.
Big Debt solving 50k/70k debt
The bigger the debt the more desperate and defensive the strategies become. We get out from a situation solving the leaky elements by applying the money saving methods of above. However at this time the debt applicants are pounding on your door, and want to see money. Using every excuse from the book to keep them at bay, and saying that the money will come soon, and other things they want to hear to buy you some time. Of course these situations are unbearable. Selling your car is a valid option, letâ€™s say you get 15 k for your old car, you might be able to pay of the remaining 30 to 50k in 5 years if you work 100 hours a week. It might be handy to lend 5k from a family member, who doesn’t ask interest rates. And pay that person back in episodes that won’t last longer then 14 months, otherwise that member really could begin starting to hate you, and if you manage to take the deep breathe that was required and get out of this horrible situation you will have a life lesson enough to understand why you should NEVER be in a debt situation.
A Final warning
Watch out for leeches. When your ships is sinking financially, don’t think that people want the best for you. There are a lot of ‘so called’ people who advise you to put your money into their hands. DO NOT DO THIS. Always be in control of your own life. I’ve seen cases where people in deep financial trouble where willing to give their money away to ‘unknown’ institutions, onlt to have the institutions mysteriously disappear.
Debt and Money.
There are a lot of misconceptions about money in this country. All of my life I was exposed to debt. Credit card offers. Cheap car loans. 30 year and 0% down mortgages. The lending business is huge. And we Americans consume debt like we consume food, just look at the average credit card debt the average person carries, and look at the bankruptcy rate. Itâ€™s just insane.
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Filed under: Tips on November 29th, 2006