RULE 40: Payoff Your Loans And Debts As A Priority

Peter Ayodele Fayose, Nigerian Opposition Party Politician and Governor of Ekiti State, (SW, Nigeria)
Do you clear
your credit card balance every month? If you do, and you don’t have any other
outstanding loans/debts then well done! You’re not wasting money paying
interest and you’re already in a strong position to go forward. Skip the rest
of this Rule and carry on.

If you do have
a credit card balance (or five), an overdraft and/or other loans or debts!”,
then you certainly aren’t alone. It’s so easy to get credit these days, and we
live in a ‘have it now, pay later’ society. Trouble is, debt bogs us down and
holds us back. We’re simply throwing money away paying off the interest (you
borrow, say, £20,000 and can end up paying several thousand pounds extra back
in interest – the actual amount you end up paying depends on how long you
borrow for, as well as the interest rate you’re being charged). Debt is a
millstone round the neck – it makes you feel bad, it’s always there nagging
away at the back of your mind and it can easily become a major problem that
affects your health as well as your wealth. 


(adsbygoogle = window.adsbygoogle || []).push({});

“Debt is a millstone round the neck – it makes you
feel bad, it’s always there nagging away at the back of your mind and it can
easily become a major problem that affects your health as well as your wealth”.

There’s no doubt
about it. The very first thing you need to do on your wealth quest is to get
loans/debts paid off as soon as possible and do nothing else until that’s done.
There’s no point at all starting to put money into a savings account, earning
say 5 per cent interest, if you are at the same time paying 10 per cent
interest on money you owe to the bank or somebody else. It doesn’t make any
sense. The simple truth is that those who borrow almost always pay a higher
rate of interest than the rate received by those who save.
I acknowledge
that you may in fact have found a special situation where you can borrow money
at a very low rate of interest and believe you can invest that money for a
bigger return, but I say be very, very, very careful indeed. You are playing
with fire here and unless the investment is absolutely risk free (which I
doubt), pay the debt/loan off as fast as you possibly can.
I should stress
here that there are a few possible special exemptions to this Rule; for
example, if you’ve borrowed to invest in, say, a business and you really know
what you’re doing. We’re really talking mainly about personal debt in this
Rule.
I’m not playing
down how difficult it is to become debt free, but it has to be done. Make a
plan as to how you’re going to get rid of your debt. Start by paying off the
highest interest debt first if you’ve more than one. Motivation is vital as
this is short-term pain for long-term gain. And of course once you finally make
it to debt free, you’re never going there again, are you? (See Rule 36
on www.asabeafrika.blogspot.com.) Of course you aren’t. You’re a Rules Player
now.
From The Book; The Rules of Wealth by
Richard Templar
(Read Rule
41
of Rule of Wealth tomorrow on Asabeafrika)

Read-to-Wealth Series


POWERED BY:



http://www.proshareng.com/

LEAVE A REPLY

Please enter your comment!
Please enter your name here