From debt to prosperity
I believe in simplicity. No matter how complex a task may seem, you can break it down to small chunks and address it.
Converting your current debt to equity may seem like a complex task. Break it down into manageable chunks and you're half way to financial freedom!
So here it is, a step by step process:
1. Get healthy!
Yes, you read it right. Exercise! Your physical state affects your emotional state. Exercising pumps the right hormones which will help you maintain a cheerful optimistic outlook and clear your thoughts. When the going gets tough, the tough get healthy!
2. Clean up your relationships
Debt is owing something to the world around you. It may mainfest itself as money owed, but you need to analyze your relationships and take stock of what you owe people in other ways. You may owe apologies, you have taken too much without giving. You may owe support. You may simply be with people who take too much and you need to learn to give yourself equally. Create balance in your relationships. The connection between debt and owing something in relationships may not be so obvious to you, but life is really that interconnected. Be open to seeing it and addressing these issues and you will see impact on your relationship with money.
3. Articluate where you want to be
Write a statement delcaring where you want to be and the time period you want to achieve your target (Ex. Become cashflow positive having 5k surprlus in the bank by Jan 2014).
4. Write the financial challenge & seek advice
Write the problem and offer a solution. For example: (I owed the bank 10k AED, which I am paying back in full by December 2014). Seek the advice of people around you with good financial acumen, talk through the solution/s until you uncover all challenges / potential solutions.
5. List challenges and solutions
List all issues associated with the debt problem and the solutions you can imagine. (Ex. Challenge - The bank is treating me with hostility and I'm worried. Solution - I can create a plan and present it to an understanding relationship manger). Avoid any "solution" that involves borrowing from other sources.
6. Put the creditor first
You owe someone money, you cannot and should not avoid them. You need to treat them with priority and respect. Show them that respect, and they will show you leniency. Communicate regularly with your creditor, assure them of your commitment and respect those commitments through action.
This may be obvious, but sadly many ignore this and continue to live a lifesytle they cannot afford. Downsizing, and enjoying the simpler pleasures of life is critical at this stage. No car - take metro. Can't dine out, picnic on the beach. Can't take a trip, try treking the Hajjar Moutains. You not only will enjoy the simpler pleasures in life, you'll get fit doing it. Cut all credit cards, and live within your means. If you don't have the cash for it in the bank, then you shouldn't buy it.
8. Think win-win
When dealing with your creditors, think win-win. How can you make the situation good for both? Negotate terms that are in your favor, but keep their interest in mind. There's always a way to come to a mutually beneficial arrangement. This maybe the toughest negotiation you have done because it is riddled with emotion and feelings of anxiety, but it can be done.
Come clean with your loved ones and close friends. You don't have to transfer your worry to them. Simply share your situation, and state you have a solutions that requires their emotional support and encouragement. Share progress with them and accept positive support. For those who aren't able to handle pressure, simply assure them that you are on the right track regularly.
Again, a healthy, clear mind is the first step to sound judgement. Money is energy. It can harm or help you. You can attract the right type if you are in the right frame of mind. Through meditation, you train yourself to be resillient during a difficult period. You will learn discipline of the mind and emotions. You will feel stronger when negotiating. But most importantly, you will learn the balance needed to get out of debt and into prosperity.
On the surface, this maybe a simplisitic approach, but it works. Try it!