How do you get out of debt?
Yesterday I had the honor and pleasure of doing an online chat with AZ Republic readers. It was great! We had more than 130 questions! What an amazing turnout! Obviously, I couldn’t answer all of the questions in just 1 hour but we were able to get to a lot of them. Most people wanted to know how to get out of their debt. That’s what I want to talk about today.
We American’s have typically overspent in many areas, found ourselves in massive debt, and now don’t know what to do. My claim to fame is budgeting so of course I say that is the answer. Here I want to explain the process for determining where you stand financially.
1. Add up all of your consumer debt (credit cards, student loans, car loans, etc). You must know exactly how much you owe to see the true picture.
2. Create a realistic budget which includes all income and all expenses (not just bills). Capture grocery, fuel, and any miscellaneous spending.
3. Determine a payoff plan. How much extra money do you need to pay off all your debt in less than 3 years?
4. Is there a way to increase your income or rework your budget to work this payoff plan?
5. Get to work!
Most of the time my clients are able to get free of their debt in less than 3 years if they track all of their expenses, decrease their outgo, and increase their income. Think about it. If you could guarantee no more payments wouldn’t you work your tail off to do it?
This is not an easy process, but it is worth it. Once you are debt-free there is no reason to go back. Change your financial future. Create a legacy for your children. Let others know the hard work pays off! My monthly payments at one time were over $1000/month! Getting free of my own debt has given me the freedom to help others. What can your freedom bring you? Think about it…
