Day 6 - Device to Destroy Debt

Did you know that credit card companies charge anywhere between 40%-47% interest?

While credit card debt is costly, interest rates on other loans have also increased in the last 12 months.

Mortgage rates have climbed steeply from 2.00% to 6.00%, and so have personal and car loans.

The era of cheap credit is now behind us, and for the next few years at least, interest rates are likely to remain high.

Here are a few proven strategies to get rid of debt;

How to get rid of debt?

While getting into debt is relatively easy, paying off debt is challenging. Getting rid of debt takes a lot of intent, discipline, planning, and hard work.

But the effort is totally worth it because life on the other side is relatively easy.

Imagine what all you can do by saving on the monthly interest you pay towards various loans and cards.

Step One: Change your Mindset

• Wear your detective hat from Day 5. You should also have the credit card and bank statement handy. Also, collect your loan statements. 
• Calculate the total interest you have paid on all your cards, loans, and overdrafts in the last six months.
• Write the following three statements and read them out loud three times.

1. I could have saved AED__________ (enter the amount you calculated) in the last six months if I was debt free. 
2. Instead of paying AED________, I could have bought __________ or could have had the pleasure of ______________________________________________________
3. Now I understand the impact Debt has on my life, and I will strive to avoid debt at any cost.

Keep repeating this exercise every month until you have paid off the debt.

Print or write this on a small card that could fit into your wallet. Please read it daily whenever you are tempted to use your credit card.

Step Two: Choose a Strategy

We know paying off debt is a challenge, so we must devise an effective strategy to destroy debt. Here are two proven strategies;

Snow Ball Method 

It is the most popular debt repayment strategy championed by Dave Ramsey, a personal finance celebrity. 

Image Source: www.credello.com

Debt Avalanche Method

Image Source: www.buzzfeed.com

Use one of the abovementioned strategies to pay off your debt.

Stay focused, and, more importantly, keep working on your mindset. That is crucial to pay off debt and staying out of it.

Cheers to a Debt Free Life.