| Life sometimes puts us very difficult tests and | | | | the highest rate of interest, and finished with the |
| we feel many times in blind alleys. I personally | | | | lowest interest rate. |
| believe that there is absolutely nothing we can not | | | | 2. Separate from your budget a sum of money |
| overcome. | | | | to pay your debts each month. |
| Usually the main obstacle to handle any problem, | | | | 3. Pay the minimum on the debts of lower |
| is ourselves. While you are thinking that your | | | | interest rates and the most you can of those |
| problem has no solution, it certainly will not. | | | | debts with higher interest. |
| Perhaps one of the most common problems we | | | | 4. Try to make an extra money (garage sales, |
| face in life is to think that we have no money or | | | | used book sales, etc) and use that money to pay |
| that we are drowning in debt and can not | | | | the highest interest debts. |
| succeed. | | | | 5. Once you pay off the highest interest debt, |
| It turns out that nobody teaches us how to | | | | continue the process without reducing the |
| handle our money (at least nobody taught me.) I | | | | monthly amount of money you have been |
| think now in some schools and colleges have | | | | separating for the payment of all your debts. |
| joined business and finance courses but these are | | | | This system is mathematically the best, but often |
| not followed by anyone. | | | | does not work because there is a psychological |
| People go through life being bombarded with | | | | factor that must be also attacked. |
| advertising and consumer prompting and a | | | | If the highest interest debt is very high to you |
| number of opportunities to spend the money you | | | | this system may seem infinite psychologically |
| do not have. Young people who reach adulthood | | | | speaking. |
| are the target market of several banks and | | | | Behold that has emerged an alternative method |
| financial practically giving away credit cards. | | | | called the snowball method that aims to tackle the |
| The debt overhang has became a serious | | | | psychological problems noted above. |
| problem that can make you sink into the abyss | | | | Under this method to do the following: |
| (of course you can also become to this situation | | | | 1. Order your debts starting with those that owe |
| for a personal emergency or the costs of illness). | | | | less to those you owe more. |
| Obviously the first thing you have to do is attack | | | | 2. Set aside a monthly sum to pay your debts. |
| the causes and face your debt for what it is, a | | | | 3. Make the minimum payments on all debts |
| consequence of your nescience. Simple as it may | | | | except to the one you owe less. |
| seem absurd, the main cause of this situation | | | | 4. Any extra money you have use it to pay the |
| many times is that you spend more than you | | | | smaller debt. |
| earn. | | | | 5. When you pay off the small debt, follow the |
| But regardless to examine the causes that | | | | process to the next one without reducing the |
| brought you to this problem, the fact is that we | | | | monthly amount for the payment of your debts. |
| have a real problem to solve: we have to pay | | | | This way, you will find to put our effort to pay a |
| what we owe. | | | | small debt and you will finish it very quickly and |
| How I can eliminate debts? | | | | that will have an important psychological effect on |
| Here there are two methods recommended by | | | | you. |
| personal finance experts: | | | | You should see which of these two methods is |
| The traditional one which is completely valid and | | | | best for you... but if you want to get out of debt. |
| recommended by several experts in personal | | | | Do not forget to also address the causes that led |
| finance is to do the following: | | | | to the situation where you are. It is essential in |
| 1. Order your debts starting with those that have | | | | this process to make a monthly budget. |