04 September 2013

Myth: Once in Debt, Always in Debt


This myth is probably the easiest to believe because it’s so easy to get caught in the ‘cycle of debt’ – and a vicious cycle it is. Once you incur debt, you become a slave to the lender.  You no longer have the same cash flow you once had. Now you have to make payments to the creditor or lender so you’re not able to save as much.  So the next time you need or want to buy something, you reach for your credit card or get another loan and incur even more debt.

The cycle can be broken. You must make a conscious decision not to take on any more debt. This can be difficult because you’re going to have to go without things and you’re going to have to learn how to control buying on impulse. But as with anything that requires discipline, such as dieting or budgeting, you can do it. Then, start paying off the smallest debt first and make the minimum payment on the rest of your debt. Once the smallest debt is paid off, then take the amount you were paying on that debt and apply it to the next smallest. Once that’s paid off, do the same and continue this until all your debts are paid off. It’s called a payment push and it works to pay debts down fast.



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2 comments:

  1. My motto these days is "if you cannot afford to pay cash for it, you don't need it"

    ReplyDelete
  2. Love it! We live by that creed too and it makes life so much easier and less stressful :)

    ReplyDelete

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