Get Out of Debt and Start Travelling
Debt it’s a good thing and a bad thing! Knowing what is good Debt and Bad, is going to get you travelling faster.
Check out some of the simple ways I have found to cut debt and live freely.
As mentioned above you have good debt and bad. Yes that’s right I said good debt!
My interpretation of good debt is property. Buying a house is sometimes a better solution then renting a house. Depending on where you live, you could be paying off a mortgage for the same price of renting a house. To me this is good debt as you are already spending this money so you might as well be spending it into your own asset for the future.
When time comes for a move in your life, you can rent it out and hopefully use the equity to buy your next house. Thus creating an investment portfolio that could put you in a great place for when you retire.
Bad debt is everything else in your life! When wanting to get ahead in life, ask yourself do you need it now? Owning the best car or the newest phone is fine but getting these things can put you into debt.
Buying smart will cut your “debt Vs asset” ratio, if wanting to buy a new car, try finding a demo model which will have thousands slashed from the new car price and most of the time they will have been accessorised which again can save you a few grand.
You can also find savings in the private sector. For example my Mitsubishi Challenger being only 12 months old, the owner was moving overseas and wanted a quick sale. Still holding 4 years new car warranty, this was the best buy with a savings of over $12,000 from brand new. This savings has also turned into equity with a market value worth more than the original price.
Reducing your current debt is the first step. I created a spreadsheet that shows all outgoing from weekly, monthly, quarterly and yearly. This enabled me to see a true weekly expenditure, marrying this with my average weekly income. I could see I was in the red!
Waiting for the bills to roll in is a sure way of getting yourself into trouble. Utilising the different payment options that are at your disposal, can help your cash flow situation. If you know your monthly/quarterly average bill, start paying it weekly. Not only are you reducing the impact of a $400 bill but at the same time rounding up the weekly instalments could mean putting yourself into credit.
PAYING OFF YOUR DEBT
After figuring out who and what you owe, its time to start your budget. Every debt should have a minimum instalment, which would keep the debt collectors at bay.
While maintaining this minimum instalment, start smashing your excess money into the smallest debt. Once its paid off, continue to your next smallest debt and use the same repayment that you would have paid on the first debt. combined with the minimum instalment on this next debt
an example. $500 loan with a minimum payment of $20pw using some excess money pay it off as quick as possible, once paid off move to the next e.g.. $2000 loan with a minimum of $35pw now use the repayment from the first loan to help get rid of the this loan, so your payment will be $55pw. any excess money thrown into your debts will help diminish them more quickly. keep carrying on this process until you have relieved your self of all debt.
STAYING OUT OF DEBT
One thing I’ve learnt as a spender is I’m better at spending than saving. being in control of someone else’s money is easy but being in control of your own is a lot harder. Finding a friend/family member that can help hold money from you, is a blessing.
Have the courage to ask! if you find yourself swimming in debt, ask a friend to help you on a path to success. At the end of the day we all want to enjoy our life and sometimes putting yourself into debt for that big screen TV or motorbike may make your life a little harder than you expect.
That dreadful word “saving” The one thing that stops people from travelling is the inability to save for their holiday.
Number one thing you hear all the time when you tell your friends you’re off on another adventure is “How can you afford it?”
If you’re a saver than saving for the holiday will be a breeze, but if you’re a spender then you need a little help getting those funds.
The technology we have today makes it harder than ever to save. The ease of Jumping online to transfer your dwindling savings into your spending account, to buy that carton of beer is just so easy. Going back to the dark ages of the faithful money tin is where you’re going to succeed!
You might have heard of the $2 coke bottle challenge, where filling up a 600ml coke bottle with $2 equates to $1000. Why stop there though, the $5 challenge is just as good. Grab yourself a sealed money tin from the cheap shop and chuck all the $5 notes that you come across into the tin for a year. Actively go and withdraw $100 a week from the ATM and use cash for all your small purchases. Keeping the $2 coins and $5 notes that you come across will put you in a great place in 12 months time.
The secret is fuel vouchers! Birthdays and Christmas ask for fuel vouchers. Doesn’t matter what fuel stations or amount it all adds up. Also buy fuel vouchers every week, so when you’re putting that $50 worth of fuel in get another $50 or what you can afford. Before too long you will have half your fuel costs in vouchers.
Other ways to getting vouchers are things like FLYBUYS, you accumulate points when shopping. If you are good with your money you can accumulate points with a credit card. Some credit cards have a rewards points system and every year you could accumulate about $500-$800 in fuel vouchers, now that’s a lot of free fuel!!
Don’t worry about fuel vouchers expiring before use, just use them and buy a new voucher at the same time. The point to the voucher scheme is when you have money you spend it!! But if you have fuel vouchers its pretty hard to put $500 worth of fuel in your car at once, but if it was cash it would disappear in a heartbeat!!!