August 20, 2023 • 26 mins
Have debt problems this episode talks thru all the steps to getting debt under control. Beginning with identifying the problem and the steps to take to tackle this problem.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Charles McDonald (00:04):
Hello, I'm your host, Mr. Chuck, I retired
accountant turned truck driver,I reduce my debt in a relatively
short period of time, debtreduction, to achieve financial
freedom takes commitment,confidence, determination. That
(00:25):
problem overview, have debtproblems, this episode talks
through all the steps to gettingdebt under control, beginning
with identifying the problemsand the steps to tackle the
problem.
The first step is to realize youhave too much debt that your
(00:48):
debt is out of control. Whetherit's because you have two
mortgages on your home and aline of credit, rather, maybe
because you got three car loans,or maybe because you have
multiple credit cards that youcannot pay off every month.
(01:08):
Whether it's charged up to thelimit or not, it does not
matter. Well, how do you realizethis? And when do you start to
take control. As soon as yourealize you have a problem.
Maybe it's because you don'thave any living paycheck to
(01:29):
paycheck, maybe because once youmake all your payments on all
your loans, and all yourutilities, your car payments,
put gas in the car and buygroceries, you don't have any
money leftover, you don't knowwhere it's going. If you don't
know where your money is going,you probably have a debt
(01:50):
problem. So one way to figurethis out is add up all your
credit card and personal loandebt payments that you make
every month. How much is that?
Is that more than 25 to 30% ofyour take home pay? If yes, you
probably have a debt problem.
(02:13):
Think what you could do withthat money every month, if you
weren't making these loanpayments, what could you do, you
can increase your savings ofwhere you have a larger
emergency fund, you could paydown other debt, you have maybe
a car, pay off a car loan, ormaybe pay off one of your line
(02:36):
of credits or your one of yourmortgages. It definitely will
help you get better along inyour finances quicker, the less
debt you have. Now, how did youget yourself and this much debt,
(02:56):
there's only two ways thishappens, you spend more than the
money you make. So your if yourtake home is $1,000 a week. That
means you're spending more than$1,000 a week on something and
you're using credit to make upthat difference. Maybe it's only
(03:19):
a few $100 a week, maybe it'sonly $50 a week that you're
going over. But over time, itgot you in some problems. The
second way you get into thisproblem is you don't have any
emergency savings. If you don'thave a savings account, you
(03:39):
don't have an emergency fund,where you set money aside to
cover those unforeseenunexpected expenses that could
pop up such as a car breakingdown, or appliance in your home
going out whatever the currentaccident and doctor bills. So
(04:00):
you didn't have enough savingsto cover. So you had to use your
credit. And in order to pay forthose unforeseen expenses. Those
are the two ways you get introuble. So what do you need to
do? Maybe you're feelingoverwhelmed. You have three or
(04:20):
four credit cards charged up tothe max, you can barely make the
monthly minimum payments, andyou're not making any progress.
What can you do? Maybe you'repaying a little bit extra but it
doesn't seem to hope. So what doyou need to do a number one you
(04:40):
need to set some goals foryourself. He got to give
yourself something to shoot for.
He got a light at the end of thetunnel. You have to identify
what that light is. Maybe it'sjust paying off all your credit
cards. Maybe it's pan off Haveall your personal loans, or your
high interest loans, which wouldbe credit cards, personal loans,
(05:05):
payday loans, on shop loans, buyhere, pay here, car dealers,
where you're buying a car from aBuy Here Pay Here lot, a charge
a lot of interest, you may notknow that. But that interest
they're charging you is morethan what you could get if you
(05:27):
just got a car loan. So what areyour goals, the list set your
goals that I want to pay off mycredit cards or all my personal
loans and get that undercontrol. And then we can set
some goals later on down theroad. Once we chief that, if you
don't set goals, you don't knowwhat you're shooting for you how
(05:49):
are you going to achieveanything, you've got to set
something so you have somethingto work towards fairly simple
concept. Once you got that done,you need to identify what your
debt really is, maybe you knowyou have a problem, but you
(06:10):
don't know how bad it really is.
You need to look at your allyour data. And you need to get
that all down in one place whereyou do it in a spreadsheet, or
you're writing down on a pieceof paper and who you owe, how
much you owe interest rate,minimum payment. And when it's
(06:36):
due. Once you got that down, youcan then organize it by the debt
you're trying to get rid of, inthis case, credit card debt, or
all your high interest debt. Sowhen I say high interest debt,
I'm talking about credit cards,payday loans, those type of
things. At this point, just keepmaking the minimum payment on
(07:01):
your student loans. We're nottrying to pay off student loans,
we're not trying to pay off yourcar payments, and we're not
trying to pay off any of yourmortgage. We're just trying to
get high interest debt undercontrol and get rid of it. This
(07:22):
is gonna take the longest periodof time. How are you gonna do
that? Well, you need a debtreduction plan. So we identified
were a problem was we wereoverspending, set some goals,
pay off our credit cards andhigh interest credit loans. How
(07:43):
are we gonna do that? One,first, step number one, quit
using credit. That is thehardest step, because you got so
used to using credit to make upthe difference for your income,
he got to quit doing that, itmay take you a while, it may be
(08:05):
a slow process. If you're usinga credit card to pay a monthly
reoccurring Bill, you need totake those off your credit card
and pay them through yourchecking account. If you don't
have enough money to pay for itevery month and cash, do you
(08:28):
really need that item? Do youreally need that subscription,
whatever that is you're payingfor, you need to pay for it in
cash, or a debit card from yourchecking account every month,
and quit using the credit, getthose off your credit card.
That's step one. Step two is ifyou're struggling to quit using
(08:52):
credit at identifying thosesmall charges you're doing, and
just make a goal of not charginganything less than $10. And over
30 days or so you quit doingthat, then you say on my charge
and anything from $20 to zero.
So up to $20 you get rid ofthose cards, then it's $50 Then
(09:15):
it's $100 and then it's $500.
And eventually, your credit cardis not going to be used very
often only for those largeticket items. And we're gonna
solve that problem down the roadas we go because we have a plan
(09:37):
for that. So once you get quitusing your credit, then at the
same time you're gonna startmaking the minimum payment on
all your loans. Do not pay anyextra and the reason for that is
you're gonna take that moneythat you are applying to a
(09:58):
credit card or paying Extra timealone, and you're gonna start
building a savings account or aemergency fund. And we need that
emergency fund to be a minimumof $1,000. So once we get that
going, this is all happening atthe same time. So we need to
(10:19):
make the minimum payments, we'regonna reduce the amount of
credit we're using every month,we're making the minimum
payments, and any extra moneythat we would have applied to a
credit card or some other debt,we're putting in a savings
account. And we're trying tobuild that savings account, ie
our emergency fund, up to aminimum of $1,000. As time goes
(10:44):
on, this will become easier andeasier. Once we achieve that
$1,000, we keep doing the samething, quit using credit, make
the minimum payment, and applyany extra money into your
savings account until we buildit up to three to 4000. Above
(11:10):
that $1,000 Minimum emergencyfunds. And while we're doing
this, say we're up to $3,000.
Now we have an emergency fund upto $3,000. If something would
happen at this point, you have$3,000. So the next thing you
got to do is when there's anunforeseen expense crisis that
(11:32):
may happen, you use the money inyour savings account, to pay for
as much as possible. And thenanything above what you have,
you're gonna use a credit cardso that you can get it paid off.
So let's say you have the newtires, and the tires are $1,800,
(11:56):
you have 1500, in your emergencyfund, he used the 1500, you
gotta leave $1 or $20 in yoursavings account, to keep it
open. So you use as much as youcan, then the difference around
$320, let's say 1500 to 1800 320bucks, because you're leaving
(12:22):
$20 in your savings account isput on a credit card. So instead
of charging $1,800, you onlycharge $320. Therefore, you're
keeping your debt under control.
And we're working on getting itreduced. So by increasing that
(12:47):
last is the less to reduce lateron. Hope that makes sense. Once
you do this, and you have330 $500 over the $1,000. So
that would be 4500 Total in yoursavings account, you take out
(13:07):
the $3,500 and you apply it toone of your debt you're trying
to pay off. Now you can pay offthe one with the highest
interest rate. Or you can payoff the one with the lowest
balance. If you want to feellike you're making some
progress, pay off the one withthe lowest balance. And then
(13:30):
after the first one, you do notclose it, if it's a credit card,
you leave it open. Then afterthat you apply your money to the
debt with the highest rate ofinterest. The reason you don't
close the credit card is oneit's going to hurt your credit
rating, because your credit toincome ratio will go down,
(13:54):
because you'll have less credit.
And too, you'll lose out on thechance of using it when you get
an offer. Because a few monthsdown the road, that credit card
company's gonna send you in themail and offer transfer your
debt from other credit cards tous. And it's a three to a 5%
transfer fee. And we'll give you18 months 12 months of zero
(14:18):
interest on that transfer. Soyou can use that to your
advantage. You can take the highcredit car, transfer two or 3000
onto this card. You got 18months to pay it off. Let's say
you make equal payments for 18months you get to zero and that
(14:38):
other card is greatly reducedbecause you took a big chunk off
of it. And again you still doingthe same thing with you're
building up your savings andthen applying it and you can
really knock down that interesthigh interest card balance once
faster by doing that. So you useit to your advantage. You keep
(15:02):
doing this over and over untilyou reach your goal of paying
off your credit cards. Once youget that done, you might want to
build up your savings to have aminimum of 3000, you're always
going to be increasing youremergency fund. Because as life
(15:25):
goes on, things get moreexpensive, you have maybe more
children, a higher risk ofinjury to more of them at the
same time. Who knows, but youkeep building it up. Once you
get your high interest debt paydown, then you start focusing on
maybe a car loan, or maybe yourline of credit, or maybe one of
(15:49):
your mortgages that's almostunder control, that I highly
recommend you work on that loansaid with the highest rate of
interest first, and pay themdown. Cars is a good example.
Because the life of a car ismuch shorter than the life of
your home, and it goes down invalue instead of up in value. So
(16:13):
you want to try to pay off thedebt on your automobiles next,
then your home of last, you maythink that you don't want to pay
off all your debt, maybe thatcould be the case, maybe not. If
you're gonna be in your home forfive years or less, you know,
(16:33):
you're gonna be transfer or movesomewhere, maybe you don't want
to pay it off or even pay itdown. Every situation is
different at depends to you. Iwas focused on getting all my
debt paid off my credit cards,my car loans, and my home
mortgage, because I was lookingto retire. And the closer to
(16:57):
retirement I got, the more Irealized my retirement income
wasn't going to be enough to payfor all this debt that I had. So
it took me three years and eightmonths, I believe I paid off
$130,000 a debt. That was carloans, credit cards and line of
(17:18):
credit on my home, firstmortgage, we all can do it. It's
a matter of getting things undercontrol. That's what you do.
That's your debt reduction plan.
But how do you go about keepingtrack of it? Well, that's where
tracking comes into play. Youhave to keep track of everything
(17:41):
going into and out of yourchecking account, your savings
account and all your creditcards that you're using. That
will show you how much moneyyou're spending from month to
month, you will be able toidentify the things that you
don't need anymore, and be ableto cancel those subscriptions
you're not using cancel thethings that are not doing any
(18:05):
benefit to you, and get rid ofthem and quit paying for stuff
that you're not using. A goodexample of that sees anti virus
programs. I had one i demon knowabout. I just got rid of I
thought I cancelled it yearsago. But yeah, it was still
pending out there. It was stillhanging on and I took off my
(18:27):
credit card and I deleted it.
And I got rid of it and a familygot cancelled. So it's not gonna
be charged. Again, my checkingaccount ever again. $80 a year
or $90 a year, that was hismoney going to waste I was even
using that program anymore.
Things like that. Maybe it'sgoing to a gym membership. Maybe
(18:50):
you join us the gym in thewinter, but not during the
summer because you go outside,maybe you can do away with that
gym membership, cancel it, andthen reinstate it when you go
back in the fall. Whatever thecase is, we're looking for
things we're paying for. We nolonger need, get rid of, and
(19:12):
save that money and put ittoward paying off our debt, put
it to build up our emergencyfund. Because the more we can
identify the things we don'tneed and are spending money on.
That's more money and it'sfaster, we can build up our
emergency fund, and that's gonnabe faster and pay off the debt.
(19:33):
This process is slow, especiallyat the beginning. But as you
start paying off the debt, itstarts speeding up. And the less
debt you have, the faster itbecomes at the ferry and you'll
be surprised within a month ortwo. You will pay off six months
of that mortgage fairy quick.
And before you know it, youdon't have any more debt. Stay
(19:55):
focus and you got to staycommitted. in it and tracking
helps you do that. So what istracking? Tracking is nothing
but a program, an app that youcan use on your computer to keep
track of your check, register,your credit cards, everything
your money goes to money inmoney out. That's what tracking
(20:21):
does. It helps you identifythose expenses you have, because
in the program, they hadcountered categories, it's
already set up for you, it'salready easy to use. And you can
do a little bit of modificationto most of them to make it. So
it's really easy. If you enterthe transactions on a weekly
(20:43):
basis, it only takes a fewminutes every week. And it gets
faster and faster as you go.
Because they become memorizedtransactions, and they just pop
up, you just change the date,you start typing the category
name, and the who you're gonnapay, it pops up,
(21:04):
make sure the date right put,make sure the dollar amounts,
right, the category andeverything's already there for
you, you hit Enter, you're done.
Move on to the next one, itdoesn't take long once you get
it under control and learn howto use it. And the final step is
your control center is thebudget, you already have it, you
just got to take it from yourtracking program, printout a
(21:29):
report by category and createyour budget, I have talked about
all these things in length, andthen keep everything up to date
monitor where everything's goingto and over the first 12 months,
you should be able to identifyall those things that you're
wasting your money on, and getrid of them. And then it's a
(21:52):
matter of reviewing yourservices that you're paying for
specially cell phone, speciallycable TV, streaming services,
and try to cut back on cellphone service, you might find
another service, we get exactlythe same thing for 10 or $20
less a month, every pennycounts. If you can save $10 A
(22:16):
month as $120 a year, that'sthat much more, you're gonna be
able to apply to some debtyou're trying to pay off. Don't
overlook and take for granted,that's a small item, it doesn't
gonna matter. Because it alladds up over time. The sooner
you can get this under control,the sooner you can get your
(22:42):
emergency fund built up, thesooner you can start saving for
retirement or saving forwhatever goals you have, the
better off you're gonna be.
Every penny counts, never forgetthat. I'll be back in one moment
with my final thoughts. Ifyou're interested in learning
(23:05):
about an online software thathelped myself get out of debt,
it does tracking, budgeting, andkeeps track of all your assets
and all your debt and even tellsyou how much and when to
transfer money into your savingsaccount and how much and when to
(23:25):
transfer money to your debt andwhich debts to pay off and
order. First. It's not cheap.
It's a one time payment. But itwill definitely be an investment
something and yourself and aninvestment in your personal
financial life. If you'reinterested, send me an email at
(23:46):
reduced that increasewealth@gmail.com and I'll send
you the information about thisonline software that worked
great for me. This a quickreview on a debt solution for
those of you as a debt problem.
(24:08):
One identify what's causing yourdebt problem. Are you
overspending spending more moneythan what you make? Or two Did
you have an unforeseen event andwith no emergency fund or
savings account to help youcover that unforeseen emergency
event? Set your goals? What areyou goals? Are your goals trying
(24:32):
to pay off your credit cards? Ordo you have other goals? Doesn't
much matter? achieve any goalsthe less debt you have the
faster and easier it is toreach? Have a debt reduction
plan. Quit using credit. makethe minimum payment all your
(24:53):
debt, increase your emergencyfund or start an emergency fund
if you don't have one? How Haveat least a minimum of $1,000 in
your emergency fund, and thengradually increase it as your
debt is declining. Continue tobuild your emergency fund until
you have excess amount in thereof three to $4,000. And then
(25:17):
apply the access over yourminimum of 1000 and your
emergency fund to pay down yourdebt. Repeat this process over
and over until your goals aremet. And then set new goals and
continue to do this. This can beachieved by tracking, keeping
(25:38):
track of all your income and allyour expenses everything you're
paying on a regular basis byhaving a tracking app on your
computer, and then have acontrol center of budget. Set up
a budget so you know what'sgoing on. And this doesn't
happen to you again. In thefuture. You can keep control of
(26:00):
your finances by tracking andhaving your control center or a
budget. I hope this is helpful.
And stay tuned for more usefulinformation and the next coming
episodes
Hello, I'm your host, Mr. Chuck, I retired
accountant turned truck driver,I reduce my debt in a relatively
short period of time, debtreduction, to achieve financial
freedom takes commitment,confidence, determination. That
(00:25):
problem overview, have debtproblems, this episode talks
through all the steps to gettingdebt under control, beginning
with identifying the problemsand the steps to tackle the
problem.
The first step is to realize youhave too much debt that your
(00:48):
debt is out of control. Whetherit's because you have two
mortgages on your home and aline of credit, rather, maybe
because you got three car loans,or maybe because you have
multiple credit cards that youcannot pay off every month.
(01:08):
Whether it's charged up to thelimit or not, it does not
matter. Well, how do you realizethis? And when do you start to
take control. As soon as yourealize you have a problem.
Maybe it's because you don'thave any living paycheck to
(01:29):
paycheck, maybe because once youmake all your payments on all
your loans, and all yourutilities, your car payments,
put gas in the car and buygroceries, you don't have any
money leftover, you don't knowwhere it's going. If you don't
know where your money is going,you probably have a debt
(01:50):
problem. So one way to figurethis out is add up all your
credit card and personal loandebt payments that you make
every month. How much is that?
Is that more than 25 to 30% ofyour take home pay? If yes, you
probably have a debt problem.
(02:13):
Think what you could do withthat money every month, if you
weren't making these loanpayments, what could you do, you
can increase your savings ofwhere you have a larger
emergency fund, you could paydown other debt, you have maybe
a car, pay off a car loan, ormaybe pay off one of your line
(02:36):
of credits or your one of yourmortgages. It definitely will
help you get better along inyour finances quicker, the less
debt you have. Now, how did youget yourself and this much debt,
(02:56):
there's only two ways thishappens, you spend more than the
money you make. So your if yourtake home is $1,000 a week. That
means you're spending more than$1,000 a week on something and
you're using credit to make upthat difference. Maybe it's only
(03:19):
a few $100 a week, maybe it'sonly $50 a week that you're
going over. But over time, itgot you in some problems. The
second way you get into thisproblem is you don't have any
emergency savings. If you don'thave a savings account, you
(03:39):
don't have an emergency fund,where you set money aside to
cover those unforeseenunexpected expenses that could
pop up such as a car breakingdown, or appliance in your home
going out whatever the currentaccident and doctor bills. So
(04:00):
you didn't have enough savingsto cover. So you had to use your
credit. And in order to pay forthose unforeseen expenses. Those
are the two ways you get introuble. So what do you need to
do? Maybe you're feelingoverwhelmed. You have three or
(04:20):
four credit cards charged up tothe max, you can barely make the
monthly minimum payments, andyou're not making any progress.
What can you do? Maybe you'repaying a little bit extra but it
doesn't seem to hope. So what doyou need to do a number one you
(04:40):
need to set some goals foryourself. He got to give
yourself something to shoot for.
He got a light at the end of thetunnel. You have to identify
what that light is. Maybe it'sjust paying off all your credit
cards. Maybe it's pan off Haveall your personal loans, or your
high interest loans, which wouldbe credit cards, personal loans,
(05:05):
payday loans, on shop loans, buyhere, pay here, car dealers,
where you're buying a car from aBuy Here Pay Here lot, a charge
a lot of interest, you may notknow that. But that interest
they're charging you is morethan what you could get if you
(05:27):
just got a car loan. So what areyour goals, the list set your
goals that I want to pay off mycredit cards or all my personal
loans and get that undercontrol. And then we can set
some goals later on down theroad. Once we chief that, if you
don't set goals, you don't knowwhat you're shooting for you how
(05:49):
are you going to achieveanything, you've got to set
something so you have somethingto work towards fairly simple
concept. Once you got that done,you need to identify what your
debt really is, maybe you knowyou have a problem, but you
(06:10):
don't know how bad it really is.
You need to look at your allyour data. And you need to get
that all down in one place whereyou do it in a spreadsheet, or
you're writing down on a pieceof paper and who you owe, how
much you owe interest rate,minimum payment. And when it's
(06:36):
due. Once you got that down, youcan then organize it by the debt
you're trying to get rid of, inthis case, credit card debt, or
all your high interest debt. Sowhen I say high interest debt,
I'm talking about credit cards,payday loans, those type of
things. At this point, just keepmaking the minimum payment on
(07:01):
your student loans. We're nottrying to pay off student loans,
we're not trying to pay off yourcar payments, and we're not
trying to pay off any of yourmortgage. We're just trying to
get high interest debt undercontrol and get rid of it. This
(07:22):
is gonna take the longest periodof time. How are you gonna do
that? Well, you need a debtreduction plan. So we identified
were a problem was we wereoverspending, set some goals,
pay off our credit cards andhigh interest credit loans. How
(07:43):
are we gonna do that? One,first, step number one, quit
using credit. That is thehardest step, because you got so
used to using credit to make upthe difference for your income,
he got to quit doing that, itmay take you a while, it may be
(08:05):
a slow process. If you're usinga credit card to pay a monthly
reoccurring Bill, you need totake those off your credit card
and pay them through yourchecking account. If you don't
have enough money to pay for itevery month and cash, do you
(08:28):
really need that item? Do youreally need that subscription,
whatever that is you're payingfor, you need to pay for it in
cash, or a debit card from yourchecking account every month,
and quit using the credit, getthose off your credit card.
That's step one. Step two is ifyou're struggling to quit using
(08:52):
credit at identifying thosesmall charges you're doing, and
just make a goal of not charginganything less than $10. And over
30 days or so you quit doingthat, then you say on my charge
and anything from $20 to zero.
So up to $20 you get rid ofthose cards, then it's $50 Then
(09:15):
it's $100 and then it's $500.
And eventually, your credit cardis not going to be used very
often only for those largeticket items. And we're gonna
solve that problem down the roadas we go because we have a plan
(09:37):
for that. So once you get quitusing your credit, then at the
same time you're gonna startmaking the minimum payment on
all your loans. Do not pay anyextra and the reason for that is
you're gonna take that moneythat you are applying to a
(09:58):
credit card or paying Extra timealone, and you're gonna start
building a savings account or aemergency fund. And we need that
emergency fund to be a minimumof $1,000. So once we get that
going, this is all happening atthe same time. So we need to
(10:19):
make the minimum payments, we'regonna reduce the amount of
credit we're using every month,we're making the minimum
payments, and any extra moneythat we would have applied to a
credit card or some other debt,we're putting in a savings
account. And we're trying tobuild that savings account, ie
our emergency fund, up to aminimum of $1,000. As time goes
(10:44):
on, this will become easier andeasier. Once we achieve that
$1,000, we keep doing the samething, quit using credit, make
the minimum payment, and applyany extra money into your
savings account until we buildit up to three to 4000. Above
(11:10):
that $1,000 Minimum emergencyfunds. And while we're doing
this, say we're up to $3,000.
Now we have an emergency fund upto $3,000. If something would
happen at this point, you have$3,000. So the next thing you
got to do is when there's anunforeseen expense crisis that
(11:32):
may happen, you use the money inyour savings account, to pay for
as much as possible. And thenanything above what you have,
you're gonna use a credit cardso that you can get it paid off.
So let's say you have the newtires, and the tires are $1,800,
(11:56):
you have 1500, in your emergencyfund, he used the 1500, you
gotta leave $1 or $20 in yoursavings account, to keep it
open. So you use as much as youcan, then the difference around
$320, let's say 1500 to 1800 320bucks, because you're leaving
(12:22):
$20 in your savings account isput on a credit card. So instead
of charging $1,800, you onlycharge $320. Therefore, you're
keeping your debt under control.
And we're working on getting itreduced. So by increasing that
(12:47):
last is the less to reduce lateron. Hope that makes sense. Once
you do this, and you have330 $500 over the $1,000. So
that would be 4500 Total in yoursavings account, you take out
(13:07):
the $3,500 and you apply it toone of your debt you're trying
to pay off. Now you can pay offthe one with the highest
interest rate. Or you can payoff the one with the lowest
balance. If you want to feellike you're making some
progress, pay off the one withthe lowest balance. And then
(13:30):
after the first one, you do notclose it, if it's a credit card,
you leave it open. Then afterthat you apply your money to the
debt with the highest rate ofinterest. The reason you don't
close the credit card is oneit's going to hurt your credit
rating, because your credit toincome ratio will go down,
(13:54):
because you'll have less credit.
And too, you'll lose out on thechance of using it when you get
an offer. Because a few monthsdown the road, that credit card
company's gonna send you in themail and offer transfer your
debt from other credit cards tous. And it's a three to a 5%
transfer fee. And we'll give you18 months 12 months of zero
(14:18):
interest on that transfer. Soyou can use that to your
advantage. You can take the highcredit car, transfer two or 3000
onto this card. You got 18months to pay it off. Let's say
you make equal payments for 18months you get to zero and that
(14:38):
other card is greatly reducedbecause you took a big chunk off
of it. And again you still doingthe same thing with you're
building up your savings andthen applying it and you can
really knock down that interesthigh interest card balance once
faster by doing that. So you useit to your advantage. You keep
(15:02):
doing this over and over untilyou reach your goal of paying
off your credit cards. Once youget that done, you might want to
build up your savings to have aminimum of 3000, you're always
going to be increasing youremergency fund. Because as life
(15:25):
goes on, things get moreexpensive, you have maybe more
children, a higher risk ofinjury to more of them at the
same time. Who knows, but youkeep building it up. Once you
get your high interest debt paydown, then you start focusing on
maybe a car loan, or maybe yourline of credit, or maybe one of
(15:49):
your mortgages that's almostunder control, that I highly
recommend you work on that loansaid with the highest rate of
interest first, and pay themdown. Cars is a good example.
Because the life of a car ismuch shorter than the life of
your home, and it goes down invalue instead of up in value. So
(16:13):
you want to try to pay off thedebt on your automobiles next,
then your home of last, you maythink that you don't want to pay
off all your debt, maybe thatcould be the case, maybe not. If
you're gonna be in your home forfive years or less, you know,
(16:33):
you're gonna be transfer or movesomewhere, maybe you don't want
to pay it off or even pay itdown. Every situation is
different at depends to you. Iwas focused on getting all my
debt paid off my credit cards,my car loans, and my home
mortgage, because I was lookingto retire. And the closer to
(16:57):
retirement I got, the more Irealized my retirement income
wasn't going to be enough to payfor all this debt that I had. So
it took me three years and eightmonths, I believe I paid off
$130,000 a debt. That was carloans, credit cards and line of
(17:18):
credit on my home, firstmortgage, we all can do it. It's
a matter of getting things undercontrol. That's what you do.
That's your debt reduction plan.
But how do you go about keepingtrack of it? Well, that's where
tracking comes into play. Youhave to keep track of everything
(17:41):
going into and out of yourchecking account, your savings
account and all your creditcards that you're using. That
will show you how much moneyyou're spending from month to
month, you will be able toidentify the things that you
don't need anymore, and be ableto cancel those subscriptions
you're not using cancel thethings that are not doing any
(18:05):
benefit to you, and get rid ofthem and quit paying for stuff
that you're not using. A goodexample of that sees anti virus
programs. I had one i demon knowabout. I just got rid of I
thought I cancelled it yearsago. But yeah, it was still
pending out there. It was stillhanging on and I took off my
(18:27):
credit card and I deleted it.
And I got rid of it and a familygot cancelled. So it's not gonna
be charged. Again, my checkingaccount ever again. $80 a year
or $90 a year, that was hismoney going to waste I was even
using that program anymore.
Things like that. Maybe it'sgoing to a gym membership. Maybe
(18:50):
you join us the gym in thewinter, but not during the
summer because you go outside,maybe you can do away with that
gym membership, cancel it, andthen reinstate it when you go
back in the fall. Whatever thecase is, we're looking for
things we're paying for. We nolonger need, get rid of, and
(19:12):
save that money and put ittoward paying off our debt, put
it to build up our emergencyfund. Because the more we can
identify the things we don'tneed and are spending money on.
That's more money and it'sfaster, we can build up our
emergency fund, and that's gonnabe faster and pay off the debt.
(19:33):
This process is slow, especiallyat the beginning. But as you
start paying off the debt, itstarts speeding up. And the less
debt you have, the faster itbecomes at the ferry and you'll
be surprised within a month ortwo. You will pay off six months
of that mortgage fairy quick.
And before you know it, youdon't have any more debt. Stay
(19:55):
focus and you got to staycommitted. in it and tracking
helps you do that. So what istracking? Tracking is nothing
but a program, an app that youcan use on your computer to keep
track of your check, register,your credit cards, everything
your money goes to money inmoney out. That's what tracking
(20:21):
does. It helps you identifythose expenses you have, because
in the program, they hadcountered categories, it's
already set up for you, it'salready easy to use. And you can
do a little bit of modificationto most of them to make it. So
it's really easy. If you enterthe transactions on a weekly
(20:43):
basis, it only takes a fewminutes every week. And it gets
faster and faster as you go.
Because they become memorizedtransactions, and they just pop
up, you just change the date,you start typing the category
name, and the who you're gonnapay, it pops up,
(21:04):
make sure the date right put,make sure the dollar amounts,
right, the category andeverything's already there for
you, you hit Enter, you're done.
Move on to the next one, itdoesn't take long once you get
it under control and learn howto use it. And the final step is
your control center is thebudget, you already have it, you
just got to take it from yourtracking program, printout a
(21:29):
report by category and createyour budget, I have talked about
all these things in length, andthen keep everything up to date
monitor where everything's goingto and over the first 12 months,
you should be able to identifyall those things that you're
wasting your money on, and getrid of them. And then it's a
(21:52):
matter of reviewing yourservices that you're paying for
specially cell phone, speciallycable TV, streaming services,
and try to cut back on cellphone service, you might find
another service, we get exactlythe same thing for 10 or $20
less a month, every pennycounts. If you can save $10 A
(22:16):
month as $120 a year, that'sthat much more, you're gonna be
able to apply to some debtyou're trying to pay off. Don't
overlook and take for granted,that's a small item, it doesn't
gonna matter. Because it alladds up over time. The sooner
you can get this under control,the sooner you can get your
(22:42):
emergency fund built up, thesooner you can start saving for
retirement or saving forwhatever goals you have, the
better off you're gonna be.
Every penny counts, never forgetthat. I'll be back in one moment
with my final thoughts. Ifyou're interested in learning
(23:05):
about an online software thathelped myself get out of debt,
it does tracking, budgeting, andkeeps track of all your assets
and all your debt and even tellsyou how much and when to
transfer money into your savingsaccount and how much and when to
(23:25):
transfer money to your debt andwhich debts to pay off and
order. First. It's not cheap.
It's a one time payment. But itwill definitely be an investment
something and yourself and aninvestment in your personal
financial life. If you'reinterested, send me an email at
(23:46):
reduced that increasewealth@gmail.com and I'll send
you the information about thisonline software that worked
great for me. This a quickreview on a debt solution for
those of you as a debt problem.
(24:08):
One identify what's causing yourdebt problem. Are you
overspending spending more moneythan what you make? Or two Did
you have an unforeseen event andwith no emergency fund or
savings account to help youcover that unforeseen emergency
event? Set your goals? What areyou goals? Are your goals trying
(24:32):
to pay off your credit cards? Ordo you have other goals? Doesn't
much matter? achieve any goalsthe less debt you have the
faster and easier it is toreach? Have a debt reduction
plan. Quit using credit. makethe minimum payment all your
(24:53):
debt, increase your emergencyfund or start an emergency fund
if you don't have one? How Haveat least a minimum of $1,000 in
your emergency fund, and thengradually increase it as your
debt is declining. Continue tobuild your emergency fund until
you have excess amount in thereof three to $4,000. And then
(25:17):
apply the access over yourminimum of 1000 and your
emergency fund to pay down yourdebt. Repeat this process over
and over until your goals aremet. And then set new goals and
continue to do this. This can beachieved by tracking, keeping
(25:38):
track of all your income and allyour expenses everything you're
paying on a regular basis byhaving a tracking app on your
computer, and then have acontrol center of budget. Set up
a budget so you know what'sgoing on. And this doesn't
happen to you again. In thefuture. You can keep control of
(26:00):
your finances by tracking andhaving your control center or a
budget. I hope this is helpful.
And stay tuned for more usefulinformation and the next coming
episodes
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