There are strategies for getting out of debt. That is what this episode is all about. We take a step by step approach to making yourself debt free.
Getting Out of Debt Show Notes:
Step 1: Get clear on your debts
List out all your debts
- Minimum payments
- Interest rates
Step 2: Track your spending
Step 3: Prioritize your needs
1. What is your minimum living expenses? What would you die without? Shelter, food, transportation, etc?
2. List your other expenses in order of importance. Things like internet, cable TV, cloths, dining out, etc.
Step 4: Make yourself cash flow positive
These are things your can do to make yourself cash flow positive. This list is in order of least to most extreme.
- Request lower interest rates on credit cards
- Reduce lifestyle expenses
- Maximize income. (Work more hour, get a raise, get a second job)
- If in collections, negotiate reduced payments
- Stop paying creditors (prioritize based on consequences)
- Get help from people who don’t charge interest, like family and friends.
- If all else fails, consider bankruptcy
Step 5: Setup an Emergency Fund
$1000 emergency fund so you don’t use credit when something goes wrong