Posted in Building Wealth, Credit Cards, Debt Free, Financial Freedom, Saving for Your Future, You and Your Money

I Plan to Get Out of Debt

Anyone who has debt says this all the time.  Nobody wants to stay in debt.  However, getting out of debt takes more than just words and intentions.  It takes action and a plan. In my podcast this week, I go in depth about how to take action and how to develop a plan yourself to get out of debt starting today.  In my last blog post, we talked about how planning is something you can do immediately to begin the journey to wealth and financial freedom.  So let’s look at how to plan to get out of debt successfully and as quickly as possible.

No one would ever build a house without a blueprint – a visual of every aspect of the house and a plan on how to build it successfully.  And that’s what you need to get out of debt – the first step is to develop a blueprint.  This is a visual of your finances – your real finances.  This first step is actually what keeps most people from ever getting out of debt. They don’t want to walk in their truth, so they stay right where they are.  If you are ever going to successfully get out of debt, you are going to need to be honest about your financial situation and be true to what you are willing to do to change it.  You need a list of all of your income and all of your expenses – this includes accounts in collections.  You need to know exactly what you owe in order to develop the best plan to pay it off.

Once you have your blueprint in place, you need to figure out the best plan for you to pay everything off.  I want to caution you about paying for this.  Most of the “debt consolidation” programs charge thousands of dollars and basically all they do is get you behind on every bill so they can get you a settlement offer.  Doing this will make your credit score even worse than it probably already is.  Once your score is damaged, it takes a long time to build it back up and even though you hopefully aren’t going into debt again, your score is your financial reputation and should be kept at a good number.  We offer a coaching service and something like that is okay – getting advice from someone who’s been there to support you is one thing, but you don’t want to pay thousands to a company for something you can do yourself.

So now you know what you owe – next, you need to figure out how to pay it off.  Using either the debt avalanche or the debt snowball method, you want to arrange your items in the order you want to pay them off.  I always recommend the snowball method because of how quickly you can pay off items in full, but pick the method that will work best for you and keep you motivated.  Once you start seeing debts being paid, you will continue to be motivated resulting in more sacrifice and more ideas on how to bring in more income.  Developing a plan and actually starting the process are the keys to success when it comes to paying off debt.

I hope after today you will stop saying “I plan to get out of debt” and you will start getting out of debt by developing a plan and taking the actions required to finish the plan as quickly as possible.  Even without any extra money, if you stop using debt and continue to make all of your debt payments, you will eventually be debt free.  But your goal should be to take actions that get you there as quickly as possible so that you can truly begin your journey to wealth and financial freedom.

Author:

Debbi is a personal finance expert, motivational speaker, and author of the award winning "The ABC's of Personal Finance", "26 Weeks to Wealth and Financial Freedom" and “50 Shades of Money”. In addition she hosts a worldwide weekly radio show and her advice has been seen in multiple media outlets including NBC News, Forbes, Money, US News, Experian just to name a few. Debbi has also been the President of Lovell Ministries since 2012.

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