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 BECOME A PART OF THE BATTLE ON DEBT

 

Many American families spend more than they make. In result, people fall into a trap and become slaves to money and their own debt.

 

There is a light at the end of the tunnel and no matter how far into debt you may be, it can be reversed with patience, diligence, steps & tips to follow with a simple proven system that works.

 

The following steps & tips will help you change your current habits that may have gotten you into financial trouble. Most people feel like there is no room in their budget to pay off their debt or catch up. The good news is... THERE IS!! You just don't see it yet, but you will soon enough.

 

The first step is to weigh the luxuries VS. necessities in your budget.

  • Necessities: groceries, rent or mortgage, utilities, medical, dental, reliable transportation and clothing. 

  • Luxuries: Fancy vehicle or phone, cable, overspending during grocery shopping, internet, coffee shops, cosmetics, eating out, expensive recreational activities, expensive clothing, gym memberships, magazine, newspaper or purified water delivery subscriptions, timeshares, the dry cleaner, etc.

 

The second step is to print out your most recent bank statement and grab two different colored highlighters. Start highlighting all of your transactions in one of the two colors. For example:

 

  • Necessities in blue

  • Luxuries in orange

 

The third step is to add up the total amount of money spent on Luxuries in one month. This is called the "FAT in your budget".

 

Fourth step. Are you ready? CUT THE FAT OUT OF YOUR BUDGET! 

Suddenly you will find money that you didn't know was there. Many will find a total fat of at least $200-$300. 

 

The fifth step is to take what you were spending on the FAT and put it toward your debt. Start with your lowest debt balance first. You want to add your total FAT to your minimum monthly payment. Once the balance is paid off, You want to take your total FAT + Debt A minimum monthly payment and apply it to Debt B minimum monthly payment.

 

Example:

 

Monthly FAT found= $200

 

Minimum monthly payments:

Credit card A= $50

Credit card B= $100

Credit card C= $150

 

Formula:

 

TOTAL FAT+Card A= New Card A monthly payment

$200+$50=$250

New Card A monthly payment=$250

 

When card A is paid off, take that new card A monthly payment ($250) and apply it to Card B minimum monthly payment ($100). 

 

$100+$250=$350

New Card B monthly payment=$350

 

When Card B is paid off, take that new card B monthly payment ($350) and apply it to Card C minimum monthly payment ($150). 

 

$150+$350=$500

New Card C monthly payment=$500

 

When Card C is paid off, Congratulations!!! You are completely out of debt in half of the time. Now, take that extra $500 in your budget and save or invest it.

 

EXTRA TIPS TO HELP YOU GET OUT OF DEBT:

 

  • Be your own barista. You can find a favorite flavor like white chocolate powder in bulk at a restaurant supply store.

  • Have a yard sale. A child's college fund, retirement and money to pay off that lowest credit card that's been hanging over your head is right under your nose. It's hanging out in your garage, storage unit, closet or excessive grocery budget.

  • Shop second hand stores.

  • Use hand me downs.

  • Get rid of duplicates. Multiple cars, dressers, tables. Sell them!! You will feel so much happier with less clutter and more money to pay off your debt. 

  • Get out of your auto loan. Put the vehicle up for sale for what you owe on it and transfer the title. The buyer will lift a huge financial burden off of your shoulders. Then you can say, "Wow, I just got $15,000 out of debt in one day!!" Wouldn't that be a great feeling? Use your tax return to buy a simple, non-fancy car in cash (not on any credit) to get you from A to B. Remember, fancy vehicles are a luxury, not a necessity.

  • Change how you grocery shop. Refer to Grocery shop on $100 or less a week to learn more.

 

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