Staying Focused

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You and debt

email.shivan.xyz

You and debt

Shivan
Jul 18, 2020
Share this post

You and debt

email.shivan.xyz

Hello Friend,

Debt costs you financially and psychologically.

After:

  1. building your budget

  2. sculpting your system, and

  3. engineering your emergency fund

Destroying your debt becomes your new priority.

If you have no debts, Bravo! But keep reading because as your life progresses, there will be decisions where going into debt will arise.

[Click here to link to full blog post]

Getting out of debt

Two ways of dissolving debt exist:

  • Avalanche method involves paying off the debt with the highest interest first.

  • Snowball method involves paying off the smallest debt first.

The avalanche method saves you the most money but the snowball method gives you the most motivation. The former may be the most logical method but you might require the latter to keep on track and not give up.

What are you going to use to pay off your debt? You are going to use the leftover money from your budget. Instead of saving for treats and once your emergency fund is large enough, then you can focus on those debts.

When to go into debt

You are at a family reunion. Think of a distance relative who you want to avoid. Treat debt the same way... most of the time. There is always going to be exceptions. These annoying uncles/cousins/aunties you have to meet are:

  • Education

  • Home-ownership

  • Business

These are investments, which can give your greater returns down the track.

When to avoid debt

Just because I gave you a conditional free pass to get debt, doesn't mean you go abusing it. You still need to exercise restraint. Here are examples where you should avoid debt:

  • Buying a car

  • Booking a holiday

  • Getting expensive items

  • Investing

  • Emergencies

These debts end up costing your more in the long run and also put you in areas of risk. If you want something nice, save up for it and buy in cash.

I want to say personal finance is personal. It is your decision on what to with you debt. I cover more in debt in the blog post linked below.

Finally, as a disclaimer, I am not a financial expert or professional. Do your own research or seek a financial professional for any major decisions.

If you find this helpful, please share this out to any friends of family. If you would like to get in touch, please send me an email. I'm here to listen.

All the best for the week ahead,

Shivan :)


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