“None are more hopelessly enslaved than those who falsely believe they are free”

Tuesday, January 19, 2010

Paying off Debt and Money Management techniques

Without question, THE first thing we need to do if we hope to achieve opulent status… the NUMBER ONE PRIORITY IS TO GET RID OF DEBT – Period. Let’s not even think about making some real money (for now) until we tackle the topic of debt because consumerism – the nonsensical spending in the “Free” World – is both toxic and rampant.

There is nothing more real and to the point that I can express in these pages than this: DEBT IS SLAVERY. And The Man, through deliberate and carefully planned manipulation, has made us accept the use of debt to buy worthless consumables in order to satisfy an insatiable appetite to appear successful. Here are some very key points, taken from Michael Mihalik's book, Debt is Slavery: and 9 Other Things I Wish My Dad Had Taught Me About Money.

1.Stop spending money needlessly on things that will become obsolete, things you really won’t use, things you really don’t need, and things that will never love you back.
2.Avoid debt like the plague.
3.Be frugal and make wise financial decisions.
4.Take steps to be diligent, proactive, and apply extreme savings in your life.
5.Ignore The Man's siren call - Marketing and Promotion - learning to recognize thinly veiled attempts to get you to spend your money unnecessarily.

Some experts would say that you need a “healthy” mix of equity and debt instruments in your “portfolio” but to me that sounds like garbage on a warm summer day: it stinks. And others tell you flat-out, you’re a fool if you pay off your mortgage. Get this: when I say get rid of your debt, I mean ALL of it… to include your mortgage.

Stay with me here. It’s a very funny thing to study Latin because while many consider it quite useless, you develop a richer understanding with regard to the true meaning of words, like MORTGAGE, for example. Mort, from the Latin, means death and Gage means to grip or to hold. Put it together and you have a very apt description of what many “experts” tell you to hold on to. One need only look at their amortization schedule to realize the necessity, if not the sheer brilliance, of paying their mortgage debt as early into the loan as possible.

I won’t even get into how stupid it is to pay interest on credit cards, no matter how low the rate (for stuff you likely don’t/didn’t really need)!

The only way you borrow against a credit card is to buy assets that are going to put money in your pocket and only when you’re relatively certain that you’ll be paying the money back in the allotted 30 days or so (so that no interest is charged). More on that later.

And Why pay for any upgrades for a house you don’t own? Maintanance? Of course. Paint and repair rotting wood and other defects. But upgrades? Never. You’ll know who owns your house after you miss 5 or more payments.

But don't despair. You can turn your current debt into serious wealthClick Here! and step into the life of opulence that you're meant to live. The Debt to Wealth system promotes the snowball method of paying your debt. The conventional wisdom on this is to pay your debts according to how much interest you're paying (The Interest Method) but I believe, as does the creator of this system, that using the snowball method gives you a needed psychological edge, at least initially. Would love to hear comments on this; please tell me about your debt journey below.

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