Now that we know why debt is bad for you the first thing you must do is to get rid of it.

What I would suggest is look at the ones you can get rid of the fastest and do that. Then look at the ones that cost you the most and get rid of them using the money you have now extra from the debt you were used to pay. Keep it like that and every new debt that is paid of add that payment towards your next bigger or more costly dept. One thing you just need to make sure is if there are penalties involved in paying debt off early and if there is ways to avoid these penalties by giving notice and what time period is associated with the notice.

The first and best rule to always remember is that you are the only one who cares about your own everyone else out there just want it for them. So if someone comes to you with a deal that is too good to be true, believe me it is and it will only cost you money in the end. So make the rule that you need to know who is getting paid for what and how much. I will come back to this topic in a later post.

Over the next few post I will show you what I have done so far. (Remember I am writing this blog as I am going along and I might make mistakes but this is the only way to learn.)

Firstly I know I was living above my means because I was sitting with a credit card debt of over R20 000! (About $3000 at that stage) And it was creeping away from zero in the wrong direction. I realised that I had to make a serious plan of changing my life style to pay off the debt. I was already working on average 11 hours work days and my health and relationship was fading away faster than what I realised.

The R20 000 was my credit card limit so when I hit it like a target and I could not get any more before the end of the month I got the wakeup call, I had to put fuel in the car to get to work the next day but there was nothing on the card to pay for the fuel, I was 33 and earned double what my parents did and I had to go and borrow money from them to get thru the month. That was it!!! Plans had to be made to change this around.

I started creating a budget and realised I am living R1200 short every month not even taking entertainment into account.  This was the first step and most important one to make, the one where you actually realize you have to work of some sort of budget. If you are anything like me that is the most difficult thing to do. Plan a budget and stick to it. Over the next few years to date that had cost me more than what I realised at the time.

For this post I want to leave you with 2 rules:

1)      Only you care about your money!

2)      Have a budget!

So it seems we all survive another end of the world and I can almost guarantee there is already a new date for the next time to correct the calculation error!
Well I have my own prediction. Each and everyone of us will experience our own individual end if the world when we die and no one know when it would be!
Since we do not know that, would it not be nice to be prepared if it did not happen soon?
I believe it would rather happen later than sooner. That is also one of the reasons why I am doing this and blogging about it to be well prepared for living the secret millionaire live for as long as it might take!
So lets celebrate life and enjoy the things we do and forget the things we have no control over!

Well simply because it robs you from your future!

If you have an overdraft on which you pay 6% interest for a year and you invest the same amount of money over the same period at the same rate you will end up being poorer than you started off!!

If you do not believe me let’s do the math.

Let’s take $1000 @6%, for a year you would have paid $381.07 interest. You would only be able to buy for $11 618.99. Look at the loan amortization example below.

Amortation example

 

If you would have invested $1000 @6% for the same year you would have earned $367.00.

Date  Amount Intrest  Total

0.000179

2012/01/01

 $  1   000.00  $    1   000.00

0.005552

2012/02/01

 $  1   000.00  $          5.55  R    2   005.55

0.005194

2012/03/01

 $  1   000.00  $        10.42  R    3   015.97

0.005552

2012/04/01

 $  1   000.00  $        16.75  R    4   032.71

0.005373

2012/05/01

 $  1   000.00  $        21.67  R    5   054.38

0.005552

2012/06/01

 $  1   000.00  $        28.06  R    6   082.45

0.005373

2012/07/01

 $  1   000.00  $        32.68  R    7   115.13

0.005552

2012/08/01

 $  1   000.00  $        39.50  R    8   154.63

0.005552

2012/09/01

 $  1   000.00  $        45.28  R    9   199.91

0.005373

2012/10/01

 $  1   000.00  $        49.43  R 10 249.34

0.005552

2012/11/01

 $  1   000.00  $        56.91  R 11 306.25

0.005373

2012/12/01

 $  1   000.00  $        60.75  R 12 367.00
 Total  $     367.00

Let’s look at this realistically. If you bought something a year back for $11 618.99 you would have paid exactly $12 000.00 or you could have invested $12 000.00 and be sitting with $12 367.00. That is effectively $748.01 more than the original purchase for exactly the same amount out of your pocket!

Now take the cash go buy the $11 618.99 item take the $748.01 you have saved and invest it for 20 years. That will give you $2 757.88.

That is $2 000 for FREE! J

This example use 6% for interest charged and earned. But reality is that charged interest is always higher than what savings or investments return. Because of this if you have $2000 and you save $1000 and pay debt with $1000 you are saving yourself poor! Go and work it out for yourself! Take the $2000 pay the debt off and for the rest of the time it would have taken you to pay the debt save the money and see how much more you have after the original calculation where you split it to $1000 debt and $1000 saving.

Now look at your home, we are talking about thousands of dollars over many years!!! Go open a new template from excel called Loan Amortization and complete the values for all your debt and see how much interest you are really paying!

On the next post I will show you exactly what I have done to get out of debt!

So what do they do different?

There is no “silver bullet” that will get you there quick. If there is one (Lotto) it will not keep you there! It is a well-known fact that most lottery winners end up being even more in depth than what they was before winning a lotto.

There is a golden rule applicable thou! That rule took most of those 6% to where they are today and that same rule will keep them there. The rule is so simple that you will read it and tell me that is impossible! It cannot be!! Leon you are missing it!!

So what do I see as this simple rule? I see the rule as the following:

“Find a bigger reason than an excuse!”

With this golden rule it is extremely simple to achieve anything in your life, if you can find a big enough reason to do it.

This rule can be taken for any area in life and for any dream or any circumstance. If you do not believe me go and read the life stories of most of the wealthy entrepreneurs in the world. Take the youngest billionaire in the world today. He did not care for so called status or class, all he cared for was to have a product that was true to what he believed people want to use. While developing Facebook Mark Zuckerberg only had one thing in mind and that was the reason why he wanted to do it. It could have started out for whatever reason there could have been, but he completed it and made it bigger and bigger because he had a reason to do it. And the golden rule is that if the reason is big enough, no matter how hard it is to get to the goal you will get there. I can name a few others, Steve Jobs and Apple, Richard Branson and Virgin, Robert Kiyosaki and Rich Dad Poor Dad and the list goes on and on…

Now I am not thinking we all can be the next Zuckerberg out there, but I do believe there is enough out there for any person that is willing to suffer for his/her reason to have whatever they want out of life.

Mark Zuckerberg

What I am using this blog for will be to show you step by step what I do to become part of that 6% in the hope that I can help others to follow me and grow that 6% to 7% or perhaps 16% J. Who knows where this will go…

My next post will be the first lesson I want to share with you. I strongly believe you can never get rich if you have bad debt.

Until my next post start finding your reason for what you want in life.

 A Journey of a Thousand Miles begin with a single step.

Not to sure if that is the actual quote or not but that is besides the point. The point I want to make is one must do some thing to execute a plan. If you have the best plan and dream in the world and you do not take that first step nothing will happen. It will only be a plan and a dream which will die with you. But if you have done something to get to the dream you would have at least had a reason to live.

So what have I done in the last 4 months since I started this goal?

I first took a serious look at where I am now and what I am doing currently to get to my dream. While I was looking I discovered that I was doing what 60% of the population was doing. That was to studied for a career and work hard and save for my retirement. But when I looked at working till 60 for 40 years and then having a life expectancy of 100 I would have to save every cent I earn to be able to retire at 60. That is why only 6% of the world population are retiring comfortably. Because that 6% is not part of the 60% that work hard.

That brought me to the conclusion that there is basically only one other thing to do. That is to do what those 6% do.

On the next post, which will be much sooner than this one was from the first, I will tell you what I found those 6% are doing different.

Image

Welcome to myroad2millionaire.me! or start a new post.
I will be using this blog to give you a detailed break down step by step on how I will become financially free in the next 3 years.
My goal is to become a secret millionaire, to go out and change people who desperately needs support, life dramatically around!
How am I planning on doing it? Well stick around and find out! :)

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