How I got out of the blackhole of debts

It has been a while I did not write any posts, but I am still on my journey of self discovery. I am doing my best to stay on track and not to get sidetracked.

One of my goals was to live debt free. In my last post about financial freedom, I have made a plan and started executing it to achieve this goal. I destroyed my credit cards, payed off due amounts on cards with smallest amounts, then I consolidated the rest of my cards into one bank loan to save on interest. Interest rate for most of credit cards is 25% other than monthly and yearly fees. I reconned if I pay only the minimum payment, it will take me forever to pay it off.   Bank loan interest rate is much lower, mine was about 6.0%, which made a difference. Remember, every penny counts.

I am still keeping an eye on my expenses, stopped impulsive buying. If I decide to buy something I really plan for it, ask myself do I really need it. So I was able to save a portion of my salary every month, even more than the recommended 10%. I have saved 6 months salary and kept them aside as a buffer, or emergency fund.

I have bought a small apartment and invested very little money in mutual funds. In the same time I am very reluctant to invest any money in the stock market, but I am planning to start early 2020 after paying off my credit card and bank loan.

As for debts, I have paid off my student loan in full. I kept only one credit card that I used to pay for my travel fairs and other travel expenses. I decided to stop using my credit card and pay cash instead. I am planning to pay off my credit card and bank loan by November this year, three more months to go.

I feel very proud of myself as I got myself out of the black hole of debts. Not only that, I also managed to save some money in the form of cash and in a form of small apartment. After I pay off my credit card and bank loan I am planning to save more money that will be spent to buy some shares in the stock market and on vacations to reward myself after this big achievement.

My plan was very realistic, and can be applied by any one no matter what. I will be lying to you if I told you it was a breeze or that I was able to save one or two million dollars over the past couple of years.

If you are in debt, I hope my story will inspire you to get out of debts and turn things around. The only thing you need is to have the right mindset and start. Never give up no matter what. Sure you will get some set backs on your way, just keep focused and keep going.

Good luck.

My first step on Financial freedom

 

In this world of consumerism where you can get easy access to money that you do not have in the form of loans or credit that are spent on millions of products in the markets that appeal to almost any one in the society, we became nations that consume more than they produce or in other words we spend more than what we earn. While an argument like; well I can afford to buy in credit and I am disciplined in paying my monthly payments might sound logical. On the other hand, I invite you to examine the cost of credit line only to realise that you are paying too much for things that you might not need in the first place.

 

 

Continuing with myself discovery journey that I have started recently I started questioning almost everything I am doing since I had to come up with a solid plan, in all aspects of my life, towards transforming my life. Managing my own finances was one of these aspects that was poorly managed that I felt the urgency to act upon.

 

After collecting online information and consulting with friends that I could see have made success in this area and visiting my bank for consultation I was able to come up with a plan that I have started applying immediately.

 

• I monitored my expenses for 3 moths. I entered every penny I spend into a spreadsheet on my computer, then made a monthly budget. I know how much I get every month in the form of salary and decided how am I going to spend this money (including monthly saving of a set percent of my salary). The budget that I have made is a relaxed budget, so that I do not have to get stressed out every time I spend money. Monthly budget is also set as an electronic spreadsheet. In short I continued with expenses entry in the light of the pre-set budget.

 

• I paid off my credit cards and destroyed all the cards, except for one that I use for online shopping (keeping in mind that online purchases are kept under tight control, and amounts are paid in full as soon as possible).

 

• I consolidated bank loans into one loan. This allowed me to save a little on the interest rate.

 

• Currently I am saving in an emergency fund. I am targeting 6 months salary as recommended by my banker. In parallel with that I am investing a small monthly amount in mutual funds due to the low risk factor.

 

• As medium to long term plan, I am keeping an eye on the real estate market as a venue for investment in addition to the stock market.