granddaddy8

Finance: Getting Out of Debt

The easier thing to do is not to get into debt in the first place. You can read up on this in "Rich Dad Poor Dad" by Robert Kiyosaki or "The Richest Man in Babylon" by George S Clason. Basically, live by the 70/10/10/10 rule - 70% of income for all your expenses, 10% for charity, 10% for active investing (shares, stocks, bonds) and 10% for passive investing (saving account, fixed deposit). Over the long term, you want to reduce the 70% component and increase the active investment component, until the returns from the active investment is sufficient to meet all your needs. Then you are financially-free.

Coming back to debt, one of the most important thing to do is to pay off your credit cards, one at a time and cut it up. Allow yourself to hold one credit card only as the interest charges of 18% per annum is too heavy bear. Read Joan Chatzky's advice at http://money.cnn.com/2004/09/28/pf/debt/chatzky_program_0404/index.htm.

posted by granddaddy @ 3:18 PM