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Golden rules when taking on debt

May 10, 2008

  1. Don’t borrow to your limits – lending organisations have been guilty in giving too much … give yourself a bit of a buffer to cater for interest rate rises & unexpected costs;
  2. Prepare
    follow your budget
    – well done if you set a family budget but you need to enforce it as well- don’t get slack and relent to the pleas of your kids or husband!
  3. Live to your means – living like a king on a pauper’s income is a sure recipe to disaster.
  4. Don’t keep up with the Joneses – just because your next door neighbours has the latest & greatest electronic gizmo doesn’t mean that you must have it as well … if you can’t afford it then don’t get it. Be disciplined!
  5. Cut up the credit card – it’s too easy to fall back on easy credit when you are short on funds. Learn to save up for life’s luxuries.
  6. Pay off the loans with the highest interest first – no point in paying extra off the 9% home loan if you are not reducing the 24% credit card.

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