From an individual’s perspective, one of the greatest obstacles to financial freedom, and one of the greatest financial burdens felt by most households is debt.
Most of us need to borrow to purchase a home, and generally a car.
Unfortunately, too many of us also borrow to purchase other things such as furniture, electrical appliances, and even holidays.
All of this results in a large proportion of our regular income being used for debt repayment; leaving barely enough for our current living expenditure let alone luxuries or investing for our future.
It is important to regularly review your credit and loan facilities and if possible, plan to eliminate unnecessary consumer debt.
Consolidating high interest rate loans into a lower interest rate facility is a sensible thing to do for most people if you are able to, but it is usually not enough.
If consolidating is not an option, using a rifle approach rather than a shot gun approach by prioritising debts and focussing on eliminating the highest priority debt first works better than paying a little bit extra across several loans.
Once a loan is paid off, redirect that loan repayment to the next priority loan to accelerate your debt reduction even faster.
Finding a little extra cash to help you will turbo charge your debt elimination plan. Free up some cash by reducing your expenditure on things you can live without.
By eliminating debt we relieve some of the financial pressure we put on ourselves, and importantly, we free up cash flow.
And by freeing up cash flow we give ourselves more choices; we can use the freed up cash flow to buy more income producing growth assets, we can afford to give our children the education we want them to have, we can treat ourselves to some luxuries, we can work a little less, retire earlier, enjoy more life!