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How To Unlock Financial Freedom

How to unlock financial freedom between bond costs, education expenses, auto loans, and credit card debt. Being debt free is quite a financial feat for the average household.  Some people might think that having a few hundred Rands of debt is a major problem, while others are can barely survive under the weight of their out-of-control balances.  In either case, controlling and reducing debt is a concern which requires a deliberate strategy if it is to be achieved.  Even if debt is not an overriding concern of yours, reducing its costs can be the quickest way to improving your cash flow so you can commit more to savings.

Taking Measure of your Debt

In this day of double digit interest charges, having zero debt is the best strategy, but that isn’t always possible for many business owners.  If you have to carry debt, it is important to at least keep it at a level that can be safely maintained by your ability to pay it.  Your income dictates how much debt you can carry and still pay all of your other expenses, and still have some money left over for savings.

Your debt to income ratio is a key determinant for lending institutions when they consider your request for a loan or credit card.  Keeping your ratio low this is a start for controlling your debt.  Setting a goal to reduce your ratio by 2% each month, could have you out of debt within 18 months. Ask yourself if you need help.

Don’t Add New Debt

Budget planning is very important as it enforces the discipline that some people lack in order to keep them living within their means.

Credit cards can be an effective cash management tool, if used responsibly and help you control and track your expenses.  The danger with them is the ease in which impulse purchases can be made. The better approach is to switch to using debit cards and keep one credit card on hand to use for emergencies.


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