“I feel like I’m finally ready to get on top of my debt. It’s just getting worse, the more I ignore it.” This was me years ago. I knew I needed to do something, I just didn’t know what. I was in so deep there was no way I could really climb out. I ended up filing bankruptcy. Since that time, I have learned better and helped many of my clients with these 4 advanced debt strategies.
If you feel like this, you are not alone. The majority of people who are in debt have never been taught how to stay ahead of the interest game. Every day, we are exposed to easy ways to get into debt via advertising messages and credit card promotions. But rarely are we informed or aware of the struggles being in debt can cause.
In fact, Americans have become so used to pulling out their credit cards that it has become second nature. In some countries, like France, the average person charges less than $300 per year, versus the $4,200 a year Americans charge. Statistically, the average French adult saves roughly 10 percent of his/her income, while the average American saves around 4 percent.
If you are ready to move forward and get out of the debilitating financial situation you are in, then it is time to learn a few advanced debt strategies.
I would like to share concepts that will definitely help you understand how to create financial freedom and end the struggle.
Advance Strategy #1: Prioritize for payoff
Some financial pundits would tell you to pay off your highest interest debts first. But in order to get out of debt the fastest, I would suggest you prioritize your debts by their total balances, from lowest to highest.
If there are similar balance amounts, then do use the second tier prioritization method by listing them in order of highest interest rates first. For example, if you have two credit cards with balances that are nearly equal, but one has a 22.9 percent interest rate while the other has an 18.5 percent rate, then the list the debt with the 22.9 percent first. This is the debt you will focus on completely paying off first. When that is paid off, move on to the next smallest debt. Rather than spend the extra money that was saved, use it to pay a higher amount to eradicate that next debt… and so on.
I’m going to get you out of the mindset that you can reduce your debt by paying off all debts at the same time. Instead, focus on prioritizing and paying off your debts in that order.
Advance Strategy #2: Reduce your discretionary spending
There are few people on this planet that do not waste money on something or other each month. Some might pay a higher amount for gas rather than going to their local membership club, while others opt for buying expensive coffee rather than brewing it at home. When buying anything online, check for promotional codes to reduce the cost or spend a few extra minutes pricing out the item before buying. Then there is also the brand name syndrome, which is when people buy into the belief that only top brands provide quality, so paying a higher cost feels justified. Buying electronics with all the bells and whistles, only to discover they are never used, is also a waste of money.
Look at your buying habits and discover where you can find the extra money to pay more on your debt balances.
Advance Strategy #3: Reduce interest rate spending
Most people who are in debt don’t believe they have choices over how much interest they are paying monthly. They either don’t shop around for the best rates, or pay the minimum on credit card balances not realizing they are paying double and triple the amount for the goods or services that were purchased.
Do yourself a favor and make a list of your purchases and what you are actually paying for them after interest is added. Most people don’t even realize they are paying double and triple the purchase price for their homes!
Advance Strategy #4: Build your wealth
Once you follow strategies one, two and three, you will have plenty of extra cash on hand. That is the time to start building your wealth and looking for investments that pay compound interest. In order to do this, you will still have to spend wisely, cash and carry and watch your wealth grow!
If you are ready to blitz your debt and live the life you desire, I invite you to my free live DEATH TO DEBT MASTERCLASS January 31, 2017 7:00 PM CST.