There is a point in our lives where we go from barely being able to pay our rent to make enough money to buy new things. Here you do any of that and go splurge on new toys, take a second to stop and wait.

Maybe you have been at this point in your life before where you have had little money and then you start doing good for yourself. The question to ask yourself is when you want to do so much what is the best time to do, the best decision to take first?

You might feel like it is better to start investing in something but there are some non-negotiable terms and principles to take before investing in something. If you don’t take these steps then it is very likely you will continue down this treadmill of debt.

The first three steps to take are always the hardest for young investors, that’s why they are skipped by most youngsters.

The very first thing one must do is get rid of all bad debt. You must go on a seek and destroy mission to get rid of any bad debt you can and may have forgotten.

Then the second step a person must do is calculate how much they need a month to survive for six months just in cause we are to encounter a bad storm. Such as getting laid off or not getting paid but clients.

Debts Vs Investments

There are good and bad kinds of debt. The good debt one can have is debt used to make you money, such as a business loan. This debt isn’t necessarily bad either, your mortgage or student loans, but it should be a goal to get rid of them completely in the future. These are a sort of investment because they help you get ahead in life.

For example, your car that is a worse type of debt than your mortgage or student loans, although you need it to get to work there are cheaper options to get around so sell that car and get to your goal faster.

Any loans besides those are pretty bad debts. Any personal loans, bank loans, credit cards are very bad and need to get rid of asap.

Don’t ignore anyone who can do physical harm to you for not paying back a debt, but sometimes personal loans can wait a sec.

Lets Pay Off The Ugliest Debt First

So what exactly is ugly when it comes to credit cards? The higher the interest rate the uglier that sucker is. After that then you need to decide what is the soon to be high interest.

You those great deals that companies give you about not having to pay for a year, that very sucker is up tomorrow and its gonna be ugly.

Once these bad debts are identified, plan on getting on the phone with your creditors and asking for some breathing room. You could possibly delay payments or ask for a restructuring of some sort but be whereof possible repercussions

IF a refinance frees you up to pay down another bill only to haunt you worse in 6 months then in might not be a good idea for this. You want to be reasonable with your payments not make the situation worse.

Think of it like this. Any bad debt you can pay down is like money invested.

In other words or mathematical terms, you are paying 15% interest on your credit card and you were to make an investment that pays 20% then you are not really making 20% are? It is more like 5% what you are getting, yeah not good

Check for any forgotten debt

There is no worse feeling, well maybe there is but it still isn’t good. Thinking and having the satisfaction being ahead of all of your bills only to find out that you have a hospital bill from 3 years ago

Those bad debts have a way of popping up in the most inconvenient times. Just when you want to go out shopping boom there goes your phone call from your creditors

Get Organized

Once you start making these calls it is time to get organized and buckle down, take out a pen and paper because there are a million ways to do this

The best way to get organized is to keep it low tech, using a notebook or actually your note app on your phone. Using a fresh sheet of paper start every month with the total debt at the top of the month and year. Check then that you are making progress.

The next step is to write columns, the first column is your creditors. The next column is the date that your bill is due. Then the third column is the amount that is due

Using your smartphone make reminders and set auto-payments so that your bill is always paid on time. like your life is on the hook for it, only like this, you will get ahead.

Save for a least six months worth of expenses.

This goal is often elusive because it doesn’t seem too far away but it could take a while because you have to pay all of your debt first then be able to save at least 20k

This money you will never want to touch because it can you be your life safer lifeboat if you were to experience losing your job you can still survive for a while.

Shop Around

Only when you have accomplished the first two goals of paying down your debt and saving 6 months of expense then you can start looking around to invest in something.

The reason you want to wait is that you will be talking to professional salespeople who will try to sell you everything they can. They may convince you to invest in something that isn’t necessarily the best investment vehicle.

Before investing in anything do your research. Shop around and really understand what you are doing or you could end up losing all that saved up money

source – http://globalgadgetnews.com/