From The Desk Of:

Justus Meyer,
Port Elizabeth, South Africa

Managing Debt

"Build a debt-free life!"

Get Out Of Debt

As human beings, we are bound to certain things - we want to be entertained and we want to have fun!

The problem is not that we are doing those things... What would life be without entertainment and fun? The problem, is that we sometimes struggle to prioritise what is most important. Sometimes we try and balance the stress with the fun, instead of trying to get rid of the stress completely.

... And debt equals stress - there is now way around it...

However, there are two types of debt, good and bad - well, sort-of... In actuality, all debt is bad. Some debt is just more "acceptable."

"Good" debt

"Good" debt is usually defined as "asset-backed" debt. In other words, for instance: You buy property and rent it out. Your loan is covered by the value of your property and you generate enough income via rent to cover your bond. This is acceptable and is generally quite manageable - unless you live on your property and you are already struggling with your finances!

The reason it can never be "good" is simply because it leaves you at the mercy of the bank - you either have the resources to withstand it, or you don't... If you do, its an easy battle to win. If you don't, its one of the tougher fights you'll ever have...

Bad debt?

Bad debt is debt that does not have an asset that covers its full value. This would include things like your credit card and student loans.

The more bad debt you accumulate - the more masters you accumulate! Those who lend you money, rule your life - whether they are an impersonal corporate bank or an associate that you can trust...

Do not give control over to someone else!

Managing debt

Think about how it would feel to have zero debt - to be completely debt-free!

Debt reduction is simple, but not necessarily easy. At the end of the day, the formula to apply is the same as it is for exercise (although, in reverse): spend less than you earn and your debt will decrease.

However, that is sometimes easier said than done. To get more ideas and some additional resources, click here to find out more about debt reduction.

Or, click here to find ideas on how to get out of debt with your credit cards, or some advice on your student loans.

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