Why you must pay debts before you get rich

If you want to get rich, then there are certain steps that you must take and certain rules of money that you must learn.

And rule number one, as painful as it might seem to be at first, is this:

Always pay off your debts as soon as you can.

Now let's think about that one - it means the car loan, it means any other credit card bills or types of credit you have, it means everything,

Yes if you have a mortgage it means that too - the fact is that the quicker you achieve financial independence of your debts the better and the more you can save.

This is true for one very simple reason - debt costs you more than you get back in savings. That's because the interest rates are higher on debt than you get back on savings.

Indeed the average mortgage over its full term doubles in value the amount you took out. So say you took out a mortgage sum of around £75,000. Then by the end of the term of that mortgage you will end up actually paying back something in the region of £150,000 which is not so clever is it.

So the earlier you can pay it back you are actually saving yourself a fortune down the line and ensuring that you have more money at the end of the process.

This means that the psychology of money is misleading. Many feel better to have large savings building up whilst they might still have a whopping mortgage - bad move, always repay any debts as soon as you can and when you have a few months savings there in case you get made redundant focus all your energy into paying off all of your bills and your mortgage etc etc as soon and as quickly as you can - that's really a key tip.

If you want financial success you need awareness to this sort of simple but ultra effective method of ensuring that your money works as hard as it can for you!

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