Home > Mom's Life > Family Finances > Family Budgets > Basic Rules for Financial Freedom: Make Wealth Happen

Slideshow Iconslideshows MORE

|

Basic Rules for Financial Freedom: Make Wealth Happen

9 of 15
writingchecks,payingbills

Pay Off Your Loans and Debts as a Priority


Do you clear your credit card balance every month? If you do, and you don't have any other outstanding loans/debts, then well done, you. You're not wasting money paying interest, and you're already in a strong position to go forward. Skip the rest of this Rule and carry on.

If you do have a credit card balance (or five), an overdraft, or other loans or debts, then you certainly aren't alone. It's so easy to get credit these days, and we live in a "have it now, pay later" society. Trouble is, debt bogs us down and holds us back. We're simply throwing money away paying off the interest. (You borrow, say, $20,000, and you can end up paying several thousand extra dollars back in interest. The actual amount you end up paying depends on how long you borrow for, as well as the interest rate you're being charged.) Debt is a millstone around the neck -- it makes you feel bad, it's always there nagging away at the back of your mind, and it can easily become a major problem that affects your health as well as your wealth.

There's no doubt about it. The very first thing you need to do on your wealth quest is to get loans/debts paid off as soon as possible and do nothing else until that's done. There's no point at all starting to put money into a savings account, earning say 5 percent interest, if you are at the same time paying 10 percent interest on money you owe to the bank or somebody else. It doesn't make sense. The simple truth is that those who borrow almost always pay a higher rate of interest than the rate received by those who save.

Next: Don't Rent, Buy

From The Rules of Money Copyright © 2007, FT Press. Used by permission of FT Press, and Pearson Education. All rights reserved.

To order this book, buy on Amazon.

stay connected

Sign up for our free email newsletters and receive the latest advice and information on all things parenting.

Enter your email address to sign up or manage your account.

Facebook icon Twitter icon Follow Us on Pinterest

editor’s picks

highlights

Healthy Smile Checklist for Kids
Have better dental check-ups with this free printable checklist that helps keep your child flossing, brushing, and smiling! Brought to you by Philips Sonicare.

Kindergarten Readiness App
It's kindergarten registration time! Use this interactive kindergarten readiness checklist, complete with fun games and activities, to practice the essential skills your child needs for this next big step. Download the Kindergarten Readiness app today!

Top 10 Earth Day Books for Children
Celebrate the environment by reading some of these great children's books about Earth Day, recycling, planting trees, and all things green!

Prom Dress Trends for 2014
Check out 2014 prom dress trends inspired by celebrities’ red carpet looks, but with a price tag under $100!