Last week I started talking to you about my program to get out of debt in 9 steps. We went over the base platform steps. This week I’m diving into steps 4, 5 and 6, where we’ll really take off into developing my program. In The Living Bible, Proverbs 24:3 says this: “Any enterprise is built by wise planning, becomes strong through common sense, and profits wonderfully by keeping abreast of the facts.” I love this verse personally and especially how the TLB phrases it.

For today, let’s focus on the first half of that verse. Getting out of debt is quite the enterprise. It won’t happen haphazardly. But with wise planning and strategic, proven steps, you can get there. Here are last week’s three tips and the next three in detail!

  1. Cut up or freeze all but one card.
  2. Pay off current charges every month or stop using the card altogether.
  3. Make the minimum payment on all debts.
  4. List your current debts. So list your mortgage, car debt, credit card, school payment, etc. on a sheet. List the debt, the balance and your current monthly payment without the taxes and insurance. We just want to look at the hard number here. Now divide the minimum monthly payment into the balance and find the number of months it would take to finish each debt. Here’s an example of what it might look like when you’re done. This is a starting place for all of the following steps. List Your Debts
  5. Begin with debt paid quickest using the minimum monthly payment. By this I mean the debt that can be paid off in the shortest number of months, not the one with the highest interest rate. (Stick with me to see why this is true next week.) So according to our debt list we made, that would be starting with Car 1.  We’re going to tackle this debt with some oomph.
  6. Determine your winning percentage.  Your winning percentage is going to be the extra room in your budget. Now I talk a lot about living on 70% in the light of eliminating consumer debt. Ideally, you’ll be investing 10% and using 10% to pay off your debt. But for many people in heavy debt, it would be better to take the 10% that you personally invest and use those funds as the winning percentage to get out of debt (20%). If you’re not in heavy debt, keep investing. So what if you’re living on 100%? Dig around in your budget and find the ten percent, or whatever your winning percentage will be. Here are some ways to find your winning percentage (I’m sorry, but they’re not the most fun): What can I sell? What expenses can I reduce or eliminate from my life (Does the Latte Factor apply)? How can I earn extra money? Scrounge together a winning percentage. Getting out of debt is like digging trenches–it’s hard work, but when it’s done, the waters can flow.

What is your winning percent? Let me know in the comments below! And be sure to come back next Monday to learn the last three steps to master debt.

This debt-freedom topic is a part of my Money Mastery teaching. I’ll be releasing this program to the public for purchase in the last week of November! Stay tuned!


Come back next Monday to find out the last three steps to becoming debt free!