Pareto Principle - 80/20 rule

In 1906 Italian economist Pareto, observed that 80% of the country's accumulated wealth was owned by 20% of the people. Later he detected that the same rule applied to other various environments and eventually this principle became Pareto Principle or 80 - 20 Rule. Here are some of the examples where this rule is applied.

• 80% of the profit comes from 20% of your customers
• 80% of the sales comes from 20% of your products
• 80% of the sales made by 20% of the staff
• 20% of the patients use 80% of the health care resources
• 80% of the crime is committed by 20% of the criminals
• 80% of your phone calls are from/to 20% of your contacts
• 80% of the decisions made in the meeting come from 20% of the meeting time
• 80% of the headaches comes from 20% of the employees, etc.

How does this rule applies to fighting debt?

1. Ability to get out of debt is 80% about the attitude and 20% about the hole you are in. Henry Ford once said - If you think  you can, or if you think you can't - you are right. Stop neglecting your debt - it's not going away, Start fighting - don't let your debt paralyze you, Keep fighting - knowing that you will win.
2. Identify and address top 20% of your financial issues and it will fix 80% of your problems. Things will start looking brighter once you know what your major problems are. Create the plan of attack and intensely work on resolving the biggest issues.