Is Debt cramping your Style??

Have you ever just sat down and wondered how are you ever going to eliminate all that “month at the end of the money”?consolidation-loans

Worrying about debt is one of the most destructive obstacles to positive creativity, and effectively dealing with this ONE obstacle could very well be the breakthrough you may need to free yourself up for more exciting opportunities to! I know it was for me!

Slay this Obstacle!

I am going to show you 2 Tricks that are guaranteed to give you almost instant DEBT RELIEF! Much of the stress of having debt lies in the anxiety over the situation – but if you follow these 2 Tricks, you will also see how quickly that anxiety goes away – and that’s what I mean by “almost instant debt relief”!

First Trick: Define and Isolate your Debt

Step 1: Go to your bank and open up a separate “Debt Management” account.

Step 2: Make a list of everyone you owe money, and arrange to transfer any existing debit orders for your creditors across to that account.This way you separate all of the negativity from your current account – just the psychological effect of not seeing those amounts coming off of your existing account any more, is a huge step in the right direction!

Step 3: You may have creditors you are paying off, who are not on a debit order arrangement – make sure you pay them only from this Debt Management account in future – you may also want to set up debit orders with them, so that ALL your creditors are automatically paid month by month.

Step 4: Determine the total sum of monthly repayments, and make sure that your Debt Management account always has sufficient funds in it. For example, let’s say you have four creditors –

Creditor A – owed R4 000 – paying off R400 / month
Creditor B – owed R3 000 – paying off R300 / month
Creditor C – owed R2 000 – paying off R200 / month
Creditor D – owed R1 000 – Paying off R100 / month

These monthly repayments total up to R1 000 a month – this is the amount you need to be sure is in this account at the end of every month. What is great about doing it this way, is that you only have to worry about this single transfer per month from your current account to your debt management account – your automatic debit or stop order arrangements will take care of the rest, and you can focus on more positive and creative money earning activities!

Second Trick: The Debt Snowball

Once you have your Debt Management account set up, do this:

Step 1: Arrange your creditors from the least owed to the most owed. Your list of creditors will now be in this order:

Creditor D – owed R1 000 – Paying off R100 / month
Creditor C – owed R2 000 – paying off R200 / month
Creditor B – owed R3 000 – paying off R300 / month
Creditor A – owed R4 000 – paying off R400 / month

The reason for this is that you want to focus only on one creditor at a time, it is more often than not too overwhelming to be worrying about all of them at once. Remember, you have set up agreed-upon minimum repayments with all of you creditors already, and as long as you make sure that you are covering the R1 000 each month, they will all leave you alone.

Also, since you are focusing on the creditor you owe the least (R1 000), reaching the goal of getting them paid off and out of your life for good is less daunting than focusing on the R10 000 in total, and still worrying about the others.

Step 2: Now this is where it gets exciting! ANY EXTRA MONEY YOU EARN, WIN, ARE GIFTED, ETC. – YOU PAY TO THIS CREDITOR WHOM YOU OWE THE LEAST!! By doing this, you will suddenly find that the outstanding balance will begin dropping off much quicker than what you arranged, and the creditor will be pleasantly surprised and very happy with you!

For example, Creditor D is expecting you to pay him/her off in 10 months (R1 000 / R100 = 10 payments). Let’s say you are 2 months down the line, and you receive an unexpected R300 from someone as a gift. Your balance now 2 months later is R800 (you have made two payments of R100 each, totalling R200 off the initial balance of R1000).

Now, you ADD R200 of the unexpected R300 (after all, it is a gift – and you may want to spoil yourself with some of the gift money), thus making you total repayment to Creditor D in the third month R300 (R100 regular payment + R200 extra).

This brings your balance for Creditor D down to R500 instead of R700 for that month, AND PUTS YOU AHEAD OF THE GAME WITH THEM!!

This in itself is very encouraging, and you begin to find yourself breaking open piggy banks to find extra money to speed up the SLAYING of Creditor D, because now you can “taste blood”!

Step 3: Excited yet? It gets BETTER!! Once you have settled with Creditor D, you now have R100 per month you don’t know what to do with, right? SO YOU ADD R100 to the R200 per month of Creditor C, bumping up your monthly repayments to R300. This is why it is called the SNOWBALL method. As you settle the smaller creditors, you add those payment amounts to the next creditor on your list, and your monthly repayments begin growing like a snowball! So immediately you put yourself ahead of the game with Creditor C as well – and of course, once again, any extra money you receive goes in to settle Creditor C!…

…and so on – when Creditor C is out of the way, you add R300 to R300, for a total monthly repayment to Creditor B of R600! This will obviously be a few months down the road already, and remember, those balances would have been reducing anyway, and you may even find that your “snowball” may have grown big enough to be a single settlement repayment to the last of your creditors!!

You are now in the…

Debt free zone

Once all creditors have stopped hounding you, and you’re wondering how to to spend that R1 000 per month you now don’t know what to do with – DON”T GO OFF AND BUY A WHOLE NEW SET OF CREDITORS!!

CB Girl

Let me rather show you how to manage your everyday shopping spend (groceries, personal care, clothes etc.) in such a way as to earn extra pocket money or even to turn this System into a lucrative career! Click on the picture:

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