Step 3: avoid the debt
Debt is one of the key reasons why many people never accumulate wealth. But remember,
there are two types of debt: harmful debt and necessary debt. Damaging debt is the debt
you create for things you do not need as excessive purchases, luxury items, expensive
cars that you can not afford, etc. The necessary debt is a debt that most people must live,
such as a mortgage, a car loan (at affordable prices), doctor, university, etc.
These debts are part of the lives of most families and will be for many, many years.
However, even these types of debts should be kept within the limits of income.
If you can afford a $ 250 / month car loan, then look around until you find one at this price.
Do not give in to the temptations and pressures to buy the most expensive and
expensive car with a payment of $ 450 a month. Not worth the risk!
You could ask, “I thought these steps were to build wealth?”
As it happens, debt is the opposite of wealth. The more debt you have, the less wealth
you will accumulate. You can not save money or invest money that belongs to someone else.
If you earn $ 3,000 of income this month, but you owe $ 2,000 in loans (before everyday living expenses), you can not have extra money to save money. You have to earn more or sell
some items to pay off your debt. You should avoid this “debt trap” if you intend to build
wealth for the future.
Another type of debt is one for your business. You can take out a small business loan to
start or promote your business. If you’re not sure the business will bring profits, try to avoid commercial debt until you’ve tested it for a while.
Step 4: Develop a personal plan
Above, you have developed a business plan. Now it’s time to create a personal plan.
What tasks will you do daily to build wealth? Put yourself in a program and a limited budget.
Work daily with your goals by creating a to-do list and marking each item on the list as you
complete the tasks. In the budget, include an amount of money you put into savings
(savings account, IRAs, stocks, bonds, etc.). If you plan to invest, be sure to diversify
your investments. Choose only one or two high-risk investments and several “safer”
investments such as
mutual funds or bonds.
Step 5: Stay focused on the goal, not on the circumstances
Regardless of the circumstances in which you find yourself, keep your eyes on the goal
of building the wealth that awaits you. Even if sales are falling in your business,
do not stop dead in your tracks. Remember, companies have ups and downs.
If you stay steady towards your goal during slow times, rush times are bound to
be much better than ever. Your income will grow and you will have the extra money
needed to achieve your wealth creation goals.