As per the recent statistics regarding the consumer debt, it has been found that common Americans have as much as $15,950 as credit card debt. The rate of interest applied to these debts can range between 15-19%. Amongst these people, there are some who choose to be a full-time investor or would like to invest a part of their income in some financial tools to earn some extra dollars. However, it is important for every wannabe investor to get rid of all his debt obligations before foraying into serious investment business.
In order to achieve the above objective, people should learn how to get out of debt and then think of becoming an investor.
Steps to become a debt-free investor
These steps will help a debtor to pay off his debts and save some money which can be invested later on:
- Minimal use of bank cards – People who amassed huge debt because of incessant use of credit cards for every little purpose should do away with such behavior. It is good not to use credit cards for things that are rapidly consumed by them. For example, restaurant bills and holiday costs. This is probably the fastest mean to inflate one’s own debt amount.
- Removal of high interest debt – This is one of the best ways to get out of debt faster. One should make all the efforts to pay off the highest incurring debt first and make the minimum payments on all other credit accounts. As soon as the highest interest debt is wiped out, one should concentrate his payment efforts to next immediate high debt.
- Frequent use of cash – There are times when debtors struggle to pay off their various monthly bills in full. In this sort of situation, it will be very good for the debtor to set aside a part of the salary to make full bill payments. In case, a debtor wants to purchase a costly item, he should try to save some money for that, instead of using his credit card for the purpose. This will help him to pay the due bill with zero interest.
- Control of expenditure – People keep on buying goods without realizing the importance of those things in their life. Therefore, they must plan everything well in advance and remove all unnecessary items from the list. This trick saves a handsome amount of money that will help the debtor to get out of debt and save money.
- Building an emergency fund – People should always be ready to tackle any sort of emergencies by keeping all the necessary resources available at hand. The same applies to any sort of financial emergencies like car accidents that can put a huge dent on a person’s finances. Therefore, it is best to keep growing an emergency fund throughout one’s life.
These tips will help a debtor to get out of debt easily. Once a debtor is rid of all of his debt obligations, only then can he put his extra money in the financial markets and become a successful investor.