Clearing out our IOU's

Photo credit: http://www.maaark.com

To be financially free, we need to grow our money. It has to work for us. Yep, we know this. And to start doing this, we need to have money.

If you have debts, this means you're not even at the starting line, you are way BEHIND it. We need to get rid of our debts. Otherwise, we will keep running, without even getting to the starting line first.

Nowadays, it is so easy to find ourselves in debt. The most common is the addicting credit card. Addicting because it is so convenient. You walk into any shop and they accept credit cards. You go online and again, they accept credit cards. You can purchase practically anything using your credit card. Not only that, the cherished credit card gives you time (two weeks to a month) before needing to pay off your purchases! What a steal!

It starts out with a little tiny purchase using our credit card. Then we appreciate the convenience of charging everything to our credit card (yay, no need to worry about the payments until next month!) and we end up charging everything in sight!

We sometimes forget that we couldn't afford to purchase so many things! We think, how can I not afford it when my credit card allows me to pay only a small percentage every month? And so we go along our merry way, burying ourselves in debt.

Hey you, wake up and smell the flowers! The credit card dreamland is actually a trap! It lulls you into thinking that you are "rich" when in fact it robs you of the possibility to BE rich.

We don't actually see that these "minimum payments" is what the credit card company wants you to pay! Because this is where they earn money! The interest payments, over the course of a year, spells about 42% (at 3.5% per month). Imagine that!!! You purchase something worth PHP10,000, you end up paying PHP14,200!

We are talking about credit card debt here. There could be other kinds of debt -- bank loans (car, housing, personal), F&F loans (family and friends loans), school/office loans, etc! These need to be eliminated ASAP!

In the next post, I will share an effective technique on clearing out our IOU's.