Institutions make their money by lending money to you at a rate over the time. Simply, the long you take to pay the more it costs you and the banks thrive on it.

Debt is so easy to get into and so very difficult to get out of. Prevention is always better than cure but the reality is that we get enticed into debt over time and soon find ourselves in it way too deep. The cost of debt climbs quickly and robs us of the potential to create wealth.

You can benefit by reversing the formula
Interest + time = profit
You cannot reduce the interest rate but can reduce the time = less profit for institution
Less interest for institution means more savings for you
More savings for you compounded over time = more wealth for you

Step one
Put the plug in by making a conscious decision to get out of debt. The culprits need to be identified and cannot be allowed to increase anymore.
Credit cards, overdraft, personal loans, store accounts, even outstanding taxes. All have to stop if you want to reduce the time to pay off your debt.

Step two
Open up the tap with your disposable income. This is the money that is left over after your cost of living during the month.
Focus on living expenses. Split your expenses into ‘nice to haves’ and ‘must haves’. This is the hard work. Being honest with yourself in identifying what you need and what you can do without.

Step three
Keep a close eye on the water level. Divert the new found savings back into the debt instruments.
Targeting the highest interest bearing one first and then working through the next. Patiently keep your living expenses well under control. A new year brings on a wave of price hikes. So your cost of living will is going to increase anyway forcing you to squeeze those living expenses even more.

It is a classic case of ‘no pain no gain’, where the benefits are certainly well worth it!