I'm Concerned About Having Too Much Debt With All The Financial Turmoil Going On. How Can I Get It Paid Off?
The Debt B.A.I.L.O.U.T. System:
7 Steps To Getting Out Of Debt
by William Blake
Has the current financial crisis got you thinking more seriously about your debt and what you can do to minimize your risk? Believe me, you're not alone - this is one of the most important things on a lot of people's minds right now, both in the US and around the world.
I'm worried about this financial meltdown. How
can I get my debt paid off to reduce my risk?
As I write this, the U.S. Government is frantically trying to bailout Wall Street after they extended themselves way too far. Just yesterday, the House Republicans rejected the bill that was supposed to offer a solution - to the tune of $700 Billion dollars to bail out Wall Street.
UPDATE: The government did wind up passing that bailout bill. But the jury is still out on whether it's going to fix the problem. The stock market has been all over the place and you can find "experts" on both sides of the fence. You probably don't want to sit back and wait for this bailout plan to fix everything for you - create your own "bailout" plan so you don't need to worry!
$700 Billion dollars! That number is too big for most people to even really understand.
I sure can't imagine that much money…
Regardless of what happens though, this financial crisis has made people realize that there is no such thing as a free lunch.
So many people are overextended, carrying more debt than they can really afford and now that the banks are in trouble, they're going to be tightening up on their lending habits.
Where is that going to leave you? If your bank suddenly decided to call in your debt, what would you do? Do you have a plan in place?
If not, you're not alone.
I'd be willing to bet that 99% of the people who are carrying debt such as credit cards, lines of credit and other high interest consumer debt would have no way out other than foreclosure or bankruptcy if they suddenly had to repay everything they owe.
Whether this current crisis has you worried or not, now is the time to get serious about paying off your debt and taking control of your financial health.
|
With the way the economy has been going the last few weeks, I've been getting a lot of emails similar to this one. People are really starting to worry about having too much debt, now more than ever.
Does that ring a bell?
Well, to respond to today's question, I've got some bad news and some good news (and some even better news!)
First, the bad news. Chances are pretty good that you're right to be worried about how your debt is going to affect you. Banks and other lenders are feeling the crunch, and they're really tightening up on the money they lend.
Second, the good news. The good news is that I'm going to share my entire Debt B.A.I.L.O.U.T. System in abbreviated form in this Q & A session. You won't need to buy a thing, just keep reading the article below.
Third, the even better news. At the close of our Q & A session today, I'm going to explain how you can get your hands on the original Debt Reduction Academy training in its entirety. (That's right, all 26 lessons, mindmaps, checklists, worksheets and more!)
So let's go ahead and get started, shall we?
The 7 Step Debt B.A.I.L.O.U.T. System
No matter what kind of debt you're dealing with, whether credit card debt, car loans, personal loans, or anything else, the same principles apply to getting it paid off.
When you're dealing with high interest debt such as credit cards, it's often due to poor spending habits. But what's done is done, so there's no sense wishing you had done things differently in the past.
The key is to understand what got you to where you are, and what you need to do to get it paid off.
The Debt B.A.I.L.O.U.T. System is made up of the following steps:
B - Become Aware
A - Act After You Think
I - Itemize Your Spending
L - Leave The Doodads Alone
O - Only The Necessities
U - Undo Bad Habits
T - Take Action
In the rest of this lesson, I'll explain each of the steps. So let's get started…
B - Become Aware
The first step to getting out of debt is to become aware of exactly what got you into debt and what is keeping you there.
It's so easy to spend money you can't really afford. After all, that's what the credit card companies have been telling us for years…
"Don't worry if you don't have the cash, just charge it and get the instant gratification that comes along with having that thing that you want."
But there's always a consequence, and having to pay off that debt is the big one when it comes to credit cards. While you make payments for months or even years, the credit card companies are filling their pockets with all the interest you're giving them.
Want to try an interesting experiment? For the next 7 days, make a conscious effort to see beyond the clever ads and the sincere-sounding pitchmen on TV and take note of all the ways the credit card companies, banks and other lenders convince you to spend money you don't have.
Stop listening to the "apparent" message and start listening to the "hidden" one. You'll soon start to see these ads for what they really are - a come-on to make you spend money you don't have, so you can pay the lenders interest for as long as possible.
A - Act After You Think
Part of the reason for the current financial crisis in this country is the way we have all been conditioned to overspend and "just charge it".
I mean, let's face facts here - the banks wouldn't have overextended themselves if there weren't all those people who wanted the sub-prime mortgages and other things that brought about this problem.
They couldn't have got themselves into this trouble without customers willing to take them up on these offers!
The bottom line is that you need to start to act after you think things through. It may be a cliche, but the old saying "If it seems too good to be true, it probably is" almost always proves to be accurate.
If you can buy everything you want today, without having the money for it, and all you need to do is pull out the plastic, don't you think there's going to be a catch?
In this case, the catch is that you're going to be paying interest - a lot of it, maybe as much as 28% - to the credit card company or whoever is lending you the money.
Before you buy something on credit, sign up for a zero-interest offer for new furniture, or take out a home equity line of credit, think about the possible consequences first.
- Can you pay it off before the interest kicks in?
- What happens if you can't make your payments for some reason?
- Do you really need another doodad, or would you be better off saving that money?
I - Itemize Your Spending
Do you have a household budget that gives you a roadmap for your spending every month?
No? Don't worry - you're not the only one.
I've met far more people who don't budget their spending than those who do, and a lot of those people don't just not do it - they absolutely hate the idea.
Believe me, I used to be one of them 
I always thought that a budget would limit what I could do, and I'd either be tied down every month or I'd feel like a failure when I overspent my budget in some area.
But once I got started, I realized how much it helps to stop overspending and to see where your money is going.
Itemizing your spending (and your income) will help you identify things that you spend too much on, and things that you don't spend enough on (such as paying off your debt!)
And don't worry if you don't get it perfect in the first month. It's taken you a lot of years to create your current spending habits - don't expect them to change overnight.
L - Leave The "Doodads" Alone
Have you ever read Robert Kyosaki's book "Rich Dad, Poor Dad"? In it, he calls things like new clothes, the latest tech gadgets and new cars "Doodads".
In other words, things you don't really need but think you want because of some great sales pitch or because the neighbor up the street has one.
And these doodads are where most people overspend and get themselves into debt.
One of the keys to getting control of your debt is to stop buying these doodads and quit wasting your money.
Besides, let's face it - if you're like most people, you've probably got plenty of doodads already, most of which you rarely, if ever use!
O - Only The Necessities
This step is closely related to the last one. Stick to the necessities - no spending that isn't absolutely necessary.
This includes the "doodads" I mentioned in the last step, but it also includes little things that eat away at your money.
Things like that daily cup of coffee from Starbucks, for example. Sure, it's only a couple of bucks for the coffee but if you pick one up only three times a week, it costs you $5 to $6 per week.
That's $260 to $312 per year, which is a sizeable extra payment on your debt!
Sticking to the necessities can also mean things like buying generic brands instead of name brands when you're shopping. There are cases where you won't want to skimp, but there are plenty of things that you can buy in generic form that are every bit as good as the "brand name" sitting beside it on the shelf (often for twice the price).
Revealed: I've got a simple little technique that you can begin using right now to find money for an extra payment on your debt at the end of this month. (I first shared this in my 5 Day Email Course Operation Money-Find: How To Find Money To Start Paying Off Your Debt This Month. Click here to find out how to get your own free copy.)
Here it is: For the next 7 to 14 days, make a list of everything you spend money on. It doesn't matter if you use cash, credit card or debit card, it goes on the list.
Once you have a few days worth, go through the list and find all the things that are not absolutely necessary. Add up how much you spent on it over the course of a week.
Pick as many as you can manage, and stop spending your money on them. Put that money aside for the end of the month, when you're making your bill payments. Now take all that found money, and make a payment on one of your bills.
Sounds too obvious? I'm telling you the truth, this one single tip will cut years off your debt if you put it into action.
Now, having said all of that, in lesson two of the Debt Reduction Academy, I'm going to share 13 simple ways to find extra money every month.
I've worked with people who have come up with as much as $437 that they could use to pay off debt at the end of the month - and every month from then on.
I'll share those tips and how YOU can use them to make an extra payment on your bills every month until they're paid off.
Now, onto the "U" of our system…
U - Undo Bad Habits
This step is probably the most important of the whole process, and I'll be honest with you - it's also the most difficult.
If you've spent years building up certain spending habits, you can't expect them to change overnight.
As motivated as you might be to get your debt paid off, you're
going to find yourself naturally drawn to the things that
you've been doing that got you to where you are today.
One of the keys to changing your habits is to become more aware of the bad ones that you want to replace. If you are conscious of the problem, you're more likely to catch yourself when you start to fall back into those old patterns.
Studies have shown that it takes anywhere from 20 to 30 days of practicing new actions to make them become a habit. So don't get discouraged if you find it hard to stop doing things you shouldn't with your money. Just realize that's part of the process, and continue to work on making your new money habits your first response.
To start changing your bad habits, you should sit down and make a list of any habits or beliefs that you think might have helped get you into debt. Then make a list of the habits that you think you should replace them with to make a positive change.
Read through your list every day until you have replaced the bad habits with the good. This will help you to be more aware of them, and you'll be a lot more likely to catch yourself if you slip back into your old patterns.
I believe that creating new habits and getting rid of the bad ones is such an important piece of the puzzle for getting out of debt that I have dedicated an entire lesson in the Debt Reduction Academy (Lesson #15) to helping you "program" your brain to get rid of those old habits and make the new ones your first reaction, automatically.
Okay, so let's move on to the final step in the system, the letter "T"…
T - Take Action
I said the last step was probably the most important. Well, let me correct that statement - this step is actually the MOST important. Until you take action on all the steps in this process, absolutely nothing is going to happen.
Taking action is the key to making this whole thing work. And it's easy to say, but not always so easy to do.
Keep the end goal in mind at all times. If you find yourself wanting to give up or buy something you can't really afford "just this once" remember how that is going to affect your Debt B.A.I.L.O.U.T. Plan.
Do whatever you can to help yourself stay motivated to take action.
- Get some pictures of something that motivates you to keep at it. It could be pictures of your kids, the reward you're going to give yourself when you get your debt paid off, or anything else that helps keep you on track.
- Enlist someone to be your "partner" and help keep you accountable. This could be a family member or a friend, or someone you chat with on the internet. Tell them what you're doing and get them to follow up with you on a regular basis to make sure you're sticking with the plan.
- Set up a rewards system for reaching certain milestones (each credit card you pay off, for example) and for getting your debt paid off completely. Just make sure the rewards aren't something that's going to put you further back into debt! There's no sense rewarding yourself with a trip to Hawaii if you need to charge several thousand dollars on your credit card to go.
- Set up a "negative reward" system to keep you accountable. For example, tell a friend or your kids that if you "fall off the wagon" you're going to give them $50. Next time you reach for the credit card to buy something you can't afford, you'll think about that $50 promise and it will make you reconsider that purchase.
So there you go - I've just handed you the complete system you can use to get yourself out of debt. I call it the Debt B.A.I.L.O.U.T. System.
The Results Are Worth Getting Excited About!
I've seen some phenomenal results from using the "system". It got me from over $100,000 in debt to completely debt free, and it has worked for many other people as well.
If you'd like to find out more about the full Debt Reduction Academy training, including all 26 lessons, the checklists, the mindmaps, the worksheets and much more, visit the Debt Reduction Academy main page.
Or if you'd like to get hold of your own copy of my 5 day mini course "Operation Money-Find: How To Find Money To Start Paying Off Your Debt This Month" just enter your name and email address into the space below.
|
Free 5 Day Mini Course
|
|
|
* Every effort has been made to accurately represent this course and its potential. Please remember that each individual's success depends on his or her background, dedication, desire and motivation. As with any financial endeavor, there is no certain guarantee that you will experience the same results as others have.
Subscribe Via RSS