How to Debt Manage your Personal and Business Finances to Succeed!
BY NEALE PETERSE
Knowing how to use debt effectively, leverage finance, budget and raise finance for -property investments are key fundamental tools for successful real estate investing. Some more conservative investors prefer not to use those tools to build wealth. Their goal is to learn how to invest effectively, become and stay debt free and then live on the surplus cash after their expenses and investments and not live on credit card debt and bonus points. Hie open secret to a successful and wealthy life is to stay out of bad debt and earning (and investing) more than what you spend.
Debt Rescue statistics reveal that most SA consumers owe as much as 75% of their income to creditors and most are struggling to pay off their home loans and credit card debt. Hie majority of consumers don’t know what interest rate they are paying for their bank accounts, credit cards and loans. Only around 23% have money at the end of the month while the remaining 77% are flat broke. If your budget does not balance or your income does not match or exceed your expenses, debt starts accumulating, often spiraling out of control and requiring an urgent ‘Total Debt Makeover Plan’. According to the bible in Proverbs 22:7 “The rich rules over the poor, and the borrower are slave to the lender”.
Tony Webbstock, Debt Management Attorney, says that you must be very careful what you do to get yourself out of debt effectively. Insolvency, Business Rescue, Administration Order, Debt Review, Debt Counseling, Voluntary Distribution, Informal Repayments, Debt Restructuring and Debt Consolidation all have serious shortcomings, so be careful what programmes and advice you take!
Debt Management is not a debt collection procedure or to be confused with Debt Review, Debt Counseling or Debt Rescue. Those programmes are aimed at draining your existing income and seizing and selling off assets to service B creditors. The monthly repayments could declare you insolvent, most of the time, if that is the rout that you wanted to follow. The Total Debt Makeover Plan is an effective Debt Management process, which is a proper ‘Debt Relief Programme’.
5 Steps to FREE yourself from Debt Slavery with the Total Debt Makeover Programme:
1. Prioritize your debt – Pay yourself and your family first
2. Pay A creditor important debt first – unlike debt review and debt counseling
3. Open a Savings/Dignity fund -This is for future monthly necessary living expenses
4. Stop paying unaffordable B creditors
5. Protect your order of priority while creditors are contacted
MASTER TIP: SAVE ON YOUR BOND
More than 90% of people don’t pay extra on their bonds
Imagine you buy a house for R800 000 taking out a bond for R700 000 for 30 years at 11%. The final cost will be around R1 800 000. If you paid an extra R1 200 per month the saving is R500 000, so go for 15 years!