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Consumer Debt Reduction
How to avoid consumer debt
Before you can get out of debt, you'll first need to learn how to stay out of debt.
The first step to staying out of debt is to manage a regular budget.
Getting out of debt is the easy part, but staying out of debt is more difficult. The only way to successfully stay out of debt is by using a budget or regular money management programme.
The second step, is to realise that regular money management is a lifestyle change. You have to be prepared to accept that your past spending habits need to change if you are to stay out of debt. You probably realise this already, but the changes you'll need to make in your life are permanent.
How it works and how it pays off
A simple analogy: if you give up smoking, it's for life. You either smoke or you don't. Controlling your debt follows the same principle. You need to make a lifestyle change. You'll need to learn to manage your money and accept that your spending habits have to change. And they need to change forever. Not for one week or one month, or even for one year. This is forever.
As a quick example, an individual with $2,500 regularly outstanding on their credit cards, pays about $500 a year in interest. Imagine what you could do with $500 extra each year. It would kick-start your savings and investment programme for starters. Using the Savings Calculator, that adds up to $15,000 over 20 years, at an after tax rate of 4%.
If you're ready to embark on the journey to financial freedom, then please click here to review the Shape of Money's budget information.