05 Apr How to Get Rid of Debt Once & For All
Whether you’re a real estate investor or not, living with debt is something you don’t want to do. Debt is oppressive and builds with some sort of magical ability. As an investor, you’re going to want your assets free of danger.
Often, your pocket will be taxed when investing in real estate. You can read about coming up with a downpayment here, but let’s be realistic. Real estate investing is in no way about making money immediately. It’s an investment.
It’s no surprise that debt is a problem plaguing America. Is it also plaguing you personally? Today is the day to start tackling your personal debt.
Here are 9 steps you can take to get rid of debt ASAP!
1. Cut up or freeze all but one card.
Break out the scissors and destroy your credit cards. Do whatever it takes to make yourself stop using the cards as an excuse to bury yourself in debt. You can burn them, freeze them, cut them up, or something else entirely. But don’t cancel your accounts because that impacts your credit score. Instead, stop using the accounts and pay them off. That improves your score.
2. Pay off current charges every month or stop using the card.
You are now down to one card. You can either keep using it but make sure to pay off the current charges each month, or simply stop using it. The key here is to be religious. The following steps will be difficult if you don’t maintain this one. Prevent further debt while you move forward.
3. Make the minimum payment on all debts.
Don’t be sporadic in your attack. Rather, start a rhythm. Make the minimum payments regularly on all of your debts. It might take a moment to get into this rhythm but it’s your first step to eliminating your debt. Then you can start accelerating your process.
4. List your current debts.
List your mortgage, car debt, credit card, school payment, etc. on a sheet.
Hint: you can grab my FREE “get rid of debt” worksheets by signing up at the end of this post!
First, list the debt, the balance and your current monthly payment. Then, divide the minimum monthly payment into the balance and find the number of months it will take to finish each debt.
5. Begin with the debt paid off the 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.
6. Determine your winning percentage.
Your winning percentage is going to be the extra room in your budget. I usually suggest living on 70% while 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.
What if you’re living on 100%? Dig around in your budget and find ten percent, or whatever your winning percentage will be. Here are some ways to find your winning percentage: What can I sell? What expenses can I reduce or eliminate from my life? How can I earn extra money? Piece together a winning percentage. It’s hard work, but very worthwhile.
7. Apply your winning percentage to the debt that can be paid off the fastest.
Now, take your winning percentage and add it to the minimum payment for the debt that can be paid off in the shortest number of months. You now have an accelerated payment with an accelerated time frame!
8. Once a debt is paid off, apply the total monthly payment (including the winning percentage) to the next debt.
You’ve tackled your first, quickest debt. Now take the total monthly payment (winning percentage included) from that first debt and add it to the monthly minimum of the next debt that can be paid off the quickest. Then you repeat this pattern until you are debt free! This is do-able!
9. Apply your vastly increasing winning percentage to assets.
This part isn’t often taught in debt-freedom programs. But the reality is that debt-freedom can’t just be an end in itself. So, when you get to the end of this program, take all that “free money” you’ve got laying around since you’re not paying off debts and start putting it towards something. Start building your investment or passive income by taking those funds and investing them in stocks, bonds, real estate, business, etc.
Start building wealth. Then, change the world.
Why do you want to get rid of debt once and for all? Let me know in the comments!