Get out of debt for G.O.O.D
So you are in debt, welcome to the club – various studies have indicated well over two thirds of households in the UAE carry significant debt. In fact personal loan growth to residents in the UAE has increased by 3.8% up until the end of May this year, with total loans taken out in the January-May period already outstripping the increase for all of 2012. According to Central Bank figures total credit in the UAE grew by around AED 23bn in the January to April period to AED 839.8bn with credit to the private sector rising to AED 583.6bn in April (against AED 568.1bn in April 2012).
The sad thing about being in debt is how to deal with it. Due to social pressures and personal feelings of remorse debt has a stigma attached to it and is still very much a taboo subject. But as the statistics indicate the chances are your neighbor or colleague is carrying some sort of debt, that doesn’t make debt good, but at least you are not alone. Maybe they are coping better than you because they have long since decided to do something about it.
We always think of getting out of debt as a negative. The very word debt conjures up negativity, but any scholar of behavioral science will tell you in order to overcome an obstacle or habit it requires a new way of thinking, of implementing positive changes. But somehow the negative association of debt weighs heavily and makes this positive change even more difficult.
To help with the first steps of getting out of debt consider the acronym G.O.O.D (Get out of debt). Use these steps and you may find your self-esteem and bank balance improve considerably in the coming months.
Whilst the acronym G.O.O.D stems from “get out of debt’ it could also stand for: Goals, Outgoings, Only cash, Deeds:
Get clear on your goals
Just like having life goals, it is very important to set yourself debt free goals. Be very specific about your goals, how much you will pay off and by when.
Above all commit to a goal of spending less than you earn.
Reduce your outgoings
Some people I know downgraded their home considerably from a luxury villa to a three bedrooms apartment in order to reduce their monthly outgoings and use the difference to pay off credit card and other debt. You don’t need to keep up with the Joneses, if they judge you for where you live they are probably not the type of people you want to associate with anyway.
Not going out for at least one meal each month at an average evening cost of $ 100 will help you pay off $ 1,200 from your debts in one year.
Only use cash
It’s a known law of financial planning: Plastic attracts debt. So cut up all your credit cards (except maybe keeping one for emergencies), and when you buy, spend actual money.
Deeds speak louder than words
There is no point making a plan if you do not follow it up with action. Deeds really do speak louder than words and taking some of these proactive steps will set you on the road to debt free living. Once you have written down your goals of how you will pay off all your debts and by when, do what you say you will do.
Like everything in life, it is totally up to you, change is hard but it just takes you to make a choice and then to take the G.O.O.D steps and soon you will have changed a negative situation into a positive bank balance.
Is speaking up about your personal finances stopping you from living an empowered debt free life?