It’s time to pull Lever 2: Crush your debt.
Eliminating debt is ultimately about you taking back control. Do I fault you for getting into debt? No, I’m not here to judge. My goal is to give you the tools to move out and move on. What do I mean by that? Let’s say you’re just out of college and you have $50,000 of student debt. Or maybe you’ve had an unexpected medical emergency that has left a $10,000 bill hanging over your head.
You have a couple of choices. You can either keep adding to that debt, or say, “No more. I’m going to do whatever it takes to begin chipping away at my debt.” Maybe you went through a job layoff or a tough financial patch and racked up credit card debt during the past several years and just can’t seem to stop. It’s time to look your debt in the face and start taking steps to conquer it. It’s held you back for too long—don’t let it cost you anymore. Your first step? Be honest with yourself about the amount and origin of the debt. Car? College? Credit card? Write it down along with every interest rate.
It’s time to take steps to aggressively eliminate whatever is costing you money and holding you back from lasting wealth.
Here are a few options to consider:
- List your debts by highest interest rate to lowest.
Then it’s attack mode. Don’t settle for making the minimum payments. Pile on everything you can. Once the highest interest debt is history, then move to the next one. You’ll build momentum and confidence; you’ll feel good about taking back more of your hard-earned money. - Pay off high-interest credit cards as soon as possible.
Use those savings to build assets. The key is to make a line in the sand and say no more. I had a client one time who went so far as to put his credit cards in a Ziploc bag filled with water and freeze them. Kara and I have been in a similar position when it came to reducing our spending. Every week, we would withdraw cash and place it in labeled envelopes like “groceries” or “gas,” and that was all the money we could spend for the week. - Make a commitment every quarter to review your progress.
Football has four quarters, God gave us four seasons, companies release quarterly earnings. You’re probably seeing a pattern. Four times every year, or every three months, is a good time to press pause—to evaluate your progress. Sports teams and companies adjust along the way and so should you. Measuring leads to momentum. - Get an accountability partner.
Whether it’s a spouse, significant other, or friend, make a point to regularly check in and talk about any challenges or wins you’ve experienced. Paying off debt can feel lonely—and this step will help relieve that anxiety and fear. - Reward yourself.
Incentives are key here. This kind of strategy harkens back to our nostalgic childhoods when someone said to you, “If you do this, you’ll receive this reward.” And it worked! You cleaned your room and you got extra screen time. You raked the leaves, and you got $5 to spend as you liked. Now you’re all grown up and you can do something similar; only now you’re in charge. Say to yourself, “When (not if) I achieve this goal, I’ll treat myself.” Build it into your budget so you’ll have something to motivate you when times are tough and when temptation comes calling.
Kara and I once knew a family who had a different interpretation of being rewarded. Whenever my kids played a game at their house, their dad would always say there was a big prize at the end if you won. Once the game was over, he would say, “Surprise! You get the satisfaction of knowing you won.” My kids always thought that was lame—and you might too. If you don’t have an incentive you’re working toward, it’s a lot harder to feel motivated to achieve it. It doesn’t have to be big—it can be a clothing item you’ve been eyeing, going out to eat at a new restaurant, or donating a certain amount to a charity that represents your Generosity Purpose.
I recently played a game with myself. When my podcast launched, I set a goal of a certain number of subscribers. My daughter is a huge baseball fan, and the 2020 World Series was playing near our home in Arlington, Texas. I bought tickets for the family, but then I had an idea. I promised myself that I would not allow myself to go to the game unless I achieved a certain number of subscribers to my podcast. A sense of urgency kicked in. New ideas came to me, and the day before the game, we hit the goal! I had to back myself into a corner to reach it.
Maybe you’re in the same boat. It’s only when you willingly place yourself in a difficult spot, one in which you do not have a way out except to get out of it yourself, that you will accomplish your goal. And believe me, the day you reach your goal, that is a moment that goes on your personal highlight reel.
The more you sit and think about how the three Good Money Levers of saving more, reducing debt, and earning more can transform your life, the stronger you’ll feel a fire start to burn inside you and a new motivation will revolutionize your attitudes toward money and your life.
Here are a few questions to ask yourself:
- How could I earn more money now?
- If I had to save 20 percent of my income, could I do it? Or if I had to cut 20 percent of my expenses, could I do it?
- What are my debts, from the highest interest rate to the lowest?
- Set a payoff goal now: “I will pay off [insert $ amount and source] by [insert date].”
And now (drum roll), for everyone’s favorite lever, number three: Earn more now!
(To be continued...)
This excerpt is taken from “Good Money Revolution: How to Make More Money to Do More Good” by Derrick Kinney. To read other articles of this book, click here. To buy this book, click here.
The Epoch Times Copyright © 2023 The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.
