FP Article 27
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Debt to Riches
by Rajen Devadason
It must be great to be rich and let the other
fellow keep up appearances.
people are mired in debt than are
swimming in riches. But if you
belong to that sad majority, don't
over the world, many dig themselves
out of deep pits of debt and then
happily discover the same
disciplines that got them out of
those depressing holes are able to
make them rich!
Even if you aren't
in debt right now, chances are good
that you aren't terribly happy with
your present level of wealth either.
Am I right?
If so, I'd like you to read this article with an
open mind and a ready pen by your side.
I promise you this article will
be relatively brief. That is intentional. My aim
is to help you quickly learn 8 core principles
that you can start putting into practice...
This is an article on how to move
from a state of being in debt to
gradually growing truly rich. I hope
you enjoy reading it. But if it isn't what
you're looking for, you're welcome
to search for something that better meets
your needs. Thank you for allowing
me to serve you.
I know what it is like to be so
overwhelmed by your debts that more often than
not you can't sleep soundly. This state of
mental disturbance can result in dramatically
reduced daytime mental acuity, which yields even
worse financial decisions during your vertical
Right now, I'm going to cut
through the mess and deal with the heart of this
Those who find themselves in a
state of excessive debt got there by traveling
the exact same road that's been traversed by
Deep Debtors since time immemorial.
wide and smooth path is paved by daily decisions
to spend more than is
PRINCIPLE 1: You can't get in
debt if you don't spend more than you earn.
Conversely, those who grow richer
over time choose to traverse a narrower, rougher
street that's tarred with daily, perhaps hourly,
decisions to spend less than is earned.
PRINCIPLE 2: You can't help
but grow rich if you always focus on earning
more than you spend.
Anyone who takes the time to
figure out the average cost of his or her loans,
in annual interest rate terms, and then compares
that to the average yield on his or her savings
and investment vehicles will quickly realise
that our debts usually cost us more than our
savings and investments yield us. Yes, in that
regard, the deck is stacked against us!
Thankfully, WISDOM will find a way to prevail...
PRINCIPLE 3: Start paying
attention to interest rates charged and earned.
Those who decide that enough is
enough, who are fed up with constantly burning
up hard earned money at the altar of consumer
debt, should begin thinking and researching
repayment options and strategies that will help
them accelerate their repayments even as they
simultaneously work hard to bring their expenses
under control. It is vital to understand that
everything that's linked to moving from a state
of (seemingly) perpetual debt to one of eventual
abiding riches boils down to exercising
self-discipline in day-to-day spending
decisions. It also doesn't hurt to focus on
increasing your mental store of knowledge and
experience in your career specialty; doing so
will permit you to earn more money in the years
PRINCIPLE 4: Decide which is
more important to you: Having some shiny new toy
today or growing super rich tomorrow.
As wise people make the decision
to declare war on their debts, they always
figure out ways to spend less. This aim is
usually achieved by establishing a spending plan
or a budget.
PRINCIPLE 5: Pay attention to
your cash flow statement - comprising cash
inflows and cash outflows.
The month that you are able to
earn more than you spend, is the month that you
will end up being cash flow positive! Once you
get to that stage, it is a mathematical
certainty that you will begin growing richer.
This truth can and should be verified by
regularly updating a net worth statement -
comprising assets and liabilities.
PRINCIPLE 6: Construct and
update your net worth statement.
As you get in the habit of
monitoring your cash flow patterns and your net
worth changes, you will figure out how to
squeeze ever more cash out of your budget to
fashion into a killer bullet aimed at the heart
of your debts. Each month you are able to bring
your total debt position down, the more you will
have the following month to do the same thing
again... only better!
PRINCIPLE 7: As the principal
sum on debts is reduced, the interest charged on
the loan drops. This frees up even more cash the
following month to step up the battle against
Eventually, all your debts will
be eradicated. This will free up a great deal of
monthly cash flow to aggressively flow into
savings and investments.
PRINCIPLE 8: Don't wait to get
out of debt before saving and investing
something each month; but note that you should
become much more aggressive on this exciting
Riches Accumulation front as your debts are
beaten into a smaller and smaller pulp!
Don't let the simple wording of
these 8 principles fool you. Reread them, take
careful notes, carry out appropriate research,
decide upon clear steps you will take and watch
yourself begin your personal trek from debt to
© Rajen Devadason