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Jump off the debt train and get out of debt

Society sold us a bill of goods that is just plain wrong. The American Dream is based on being up to our eyeballs in debt. This keeps us trapped in jobs we don’t like and not pursuing what we want in life. It drives stress levels up and harms our health. We don’t spend enough time on healthy relationships because we are too busy working. The debt piles up so high we see no retirement down the road or we are too old and unhealthy to enjoy retirement when we get there. The solution is to get out of debt now.

Did you know Americans hold over $1 trillion in credit card debt? OMG! Auto debts are $1.22 trillion as of the beginning of 2018. Students loans are $1.4 trillion with some owing more than $50,000. So many people need to get out of debt.

Find your real freedom when you are financially free. You can do it. You can find many testimonies online. My partner and I did it. We made sacrifices (cut cable, sold a boat and a car) and paid off all our debts including our house. When we started we had two house payments, a car payment, over $40,000 in loans from family, and over $20,000 in credit card debt. Every time I turned around, there was another bill to pay. I hated it.

Step One

Write your financial goal on paper. This makes it concrete – real. People skip this step and then lose focus down the road and don’t get out of debt. Put it on the bathroom mirror or on the refrigerator. Only 30% of Americans have a long-term financial plan. So write your goal. Once you have yourself out of debt, you can save boatloads of money and not be like the 31% who have less than $500 in emergency savings. Then you set another goal, like early retirement or lots of travel.

Step Two

Write down all your debts and sort them from small to big. You do know what you owe, don’t you? Dig through your bills and statements so you don’t miss any. Don’t forget any that are on an automatic payment from your checking account. If you subscribe to my newsletter, I will send you a worksheet to make this set easier. Look at the bottom of the post.

Step Three

Reduce wasteful spending, sell your extra stuff to free up all the extra cash you can. We sold a boat we didn’t use and a car we didn’t like to help pay off a credit card. Eat out less, make coffee at home to take to the office, bring your lunch, and find free or inexpensive activities near home.

While you make minimum payments on all the debts, you pay all the extra money on the smallest debt. You do this each month until you pay off the smallest debt. Yeah! Every time you pay off a debt, you will want to do a happy dance. Go ahead, do it. You deserve it. Your “get out of debt” goal is possible and will get easier with the next step.

Step Four

Now you have one less debt. Take the money you paid on the smallest debt and add it to the minimum payment on the next smallest debt. You do that every month until you have that one paid off. Keep track of your progress. I have a worksheet available to use. Look for the link at the end of the article.

Step Five

So you have two debts paid off now. Apply the money paid on the second smallest debt to the minimum payment of the third smallest debt. This is your payment plan until it is paid off. Each time you pay off a debt, you are getting more encouragement and motivation to keep at it to get out of debt. That’s why the snowball method works better than paying the high interest loans first. The motivation and inspiration keeps coming as you clear the small debts off.

What’s Next?

When you have paid everything off, you are financially free but you have also learned the valuable lesson of living more simply. You have given a finger to rampant consumerism that tells you what you need. In reality, you may want a new phone but if your current phone is working fine, then you don’t NEED a new phone. The ads you see and hear everywhere try to convince you it is a need.

Now you need a new goal. You can save your money (wanna be a real millionaire?) and pursue the dream of travel or retiring early or whatever your heart desires. That is real freedom. And it is yours if you want it.

To get an easy to use worksheet to list your debts and track your payments, sign up for my newsletter. I won’t spam you and you will only hear from me if I have something helpful for you.


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