rising from the debts

are you having some nightmares about running away from your collectors/debtors? and when they reached you, you screamed and woke up.

while having some breather the doorbell rung and you saw your old friend from whom you owed some money a long time ago. then you smashed yourself bigtime and you keep telling yourself, "this is another nightmare!" pak! pak! ouch!

well, i think this is the right time to really wake up from your debt nightmares and learn how to get rid of your burdens.

here are some tips from Bo Sanchez, author of the book "8 Secrets of the Truly Rich", on how to rise from your debts.

1. declare your freedom day. thinking about all your debts will only kill your spirit. don't focus on your problem or it will magnify. you need to declare a deadline to end your woes. set a day when you'll be financially free. remember that every problem has a solution. don't lose hope.

2. simplify your lifestyle. examine your lifestyle and discover a new habit of simple joys. simplify. learn to tighten your belt. refrain from overspending. avoid unnecessary expenses. delay self-gratification.

3. schedule your payment. from a simpler lifestyle you can have or increase your savings. write down how much you can set aside each month to pay your debts. schedule all payments and start with high interest-loans. if possible, transfer high interest-loan to low-interest loans.

4. can't afford? don't borrow! if you can't afford it don't borrow! as simple as that. if the credit card in your wallet is a huge temptation, then get rid of it until you acquire discipline. you need to temper and hold yourself.

5. learn to negotiate. see your creditors regularly. assure them that you will pay faithfully but negotiate to reduce their interest rate. don't back down but use the power of persuasion. everything is negotiable. they are also human like us.

did you know that not all debts are bad?

two kinds of debts

1. bad debt. debt is considered bad if you buy things that take money away from your pocket. for example, Nene is a province girl who stopped from school and tried her luck in the metropolis to be a housekeeper. her motivation is to have her own cellphone rather than saving it for her tuition fee. she took a loan just to satisfy her want. now, the monthly load for the cellphone becomes another drain in her pocket.

2. good debt. debt is considered good if you buy things that put money into your pocket. let's take a look at the example above, if Nene converts her cellphone into a money making gadget by being a load provider then its a good debt especially if her income pays for the monthly amortization of the cellphone.

so next time you plan to take a loan, be sure that it's a good debt.

source: Bo Sanchez, 8 Secrets of the Truly Rich