Get out of debt

Today, there are three kinds of people:  the have’s, the have-not’s, and the have-not-paid-for-what-they-have’s.

Earl Wilson

Debt is the worst place to start from when wanting to build wealth. When your heavily in debt, you are building someone else’s wealth instead of your own. Getting out of debt is job #1. Lets take a look at debt. There are two kinds of debt in my opinion. Good debt and bad debt.

Good debt:

* Mortgage – Low interest long term. The 1st mortgage on your house is the only one that is “good”

*Real estate investment – short term loans for flipping houses etc. (just make sure you know what your doing)

*Car loan – Only if it is necessary and low interest. Cars are the worst investments out there. I advise you buy as high a quality as possible and keep it for as long as possible, think 10+ years. eg. 2-4 year old BMW, Mercedes, Jaguar, Lexus, Cadillac,  Lincoln etc. Older good quality will last longer than newer low quality, and you will feel better driving a nicer car.

All other debt is “bad” Get out of it as fast as humanly possible.

There are two ways to get out of debt. The best way is to pay your way out of it, if your can lower your discretionary spending eg. going out to the bar or the movies, theater, sports games, anything that is not really necessary to your well being. Use this money to pay off the debt then give yourself a reward. This will take time and discipline, but will be worth it in the long run. Doing it this way you will retain your good credit rating and standing with your bank. If you are so badly in debt that this cannot be completed in 2 – 3 years of hard work then you might want to consider option two.

Option 2: Bankruptcy ( scary word) but if there is no other way then this is a legal and moral way of getting a second chance. If you are using one credit card to pay another credit card then that credit card to pay the line of credit at the bank and so one, you are in a very scary situation. In this case you owe it to yourself and your family to talk to a trustee in bankruptcy and find out what your options are. Make no mistakes this is not an easy way out, get out of debt free solution, but if your in this kind of situation it may be your only viable choice. Don’t let pride prevent you from doing the right thing for your family. Do whatever you have to to get out of debt as quickly as possible so you can get on with the business of creating wealth.  No matter which option you use, I recommend you only  keep one credit card, the one with the lowest interest and the highest limit.  Use this card for all your daily purchases, this way you will have a good record of what you spend and where you spend it. Pay this card off in full at the end of every month. NO EXCEPTION!! Now that you are out of bad debt do not go back in.

Good luck and god speed.

Remember

Opportunities Always Knock have the Courage to Answer