Destroying Your Debts with Financial Peace University
Destroying your debts? Enroll in Financial Peace University. A class designed by Dave Ramsey to help you get control of your money, pay off all your debts, and build wealth. In nine short weeks, I was able to save $11,000 and pay off $8000 in debts. I closed all of my credit card accounts and paid off my business loans.
The principles he taught are simple and make common sense. Here are 7.5 Key Aspects for Destroying Your Debts. When I say destroying, I mean killing off all debt from your life. Credit cards, student loans, car notes, business loans, and your mortgage. Now this is not a discussion about good debt vs. bad debt. This is about you getting control of your money and becoming debt-free.
Destroying Your Debts Will Increase Your Business
Debt will destroy your business. It will wreck your professional and personal life. Businesses crumble under the debts they create. Every day bankruptcies are filed because of debt. People fund their start-ups with credit cards, personal loans, and other debt instruments, and are left with the bill if their business fails.
Just think about how much money you can invest into your business without paying those credit card bills. How many more customers you can reach without having to pay a car note? Can you see how becoming debt-free can explode your business?
Disclaimer About Debts, Dave Ramsey, and the Credit Coaches
I am not against using credit cards, debt to grow your cash flow, or getting business loans. I am against using debt for personal pleasure. There are a lot of anti-Dave Ramsey Mentors out there. People are selling systems on how to build credit, get loans, and 0% interest credit cards for “Business”.
YOU DO NOT USE YOUR CREDIT CARDS, BUSINESS LOANS, OR LINES OF CREDIT…UNLESS YOU KNOW YOU CAN MAKE A PROFIT AND GENERATE CASH FLOW. This is why I preached personal debt freedom. Debt is a double-edged sword unless you have the skill set to turn debt into cash flow. DO NOT USE IT!
Here are 7.5 Key Aspects to Destroying Your Debts:
1. Decide to Become Debt Free
You must make a conscious decision to become debt-free. Becoming debt-free just doesn’t happen. It takes consistent work. Depending on how much debt you are in it could take 2, 5, 7, 10 years, or more to become debt free. Earlier I said the principles are simple. That doesn’t make it easy. You need a gazelle-like intensity to attack your debts and then destroy them.
2. Stop Digging
Lock it down and stop incurring new debt. Only use one credit card if you need to and pay off new charges. I teach people to live on a cash basis. You can’t destroy your debts if you keep digging a bigger hole.
3. Name Every Dollar
Create a cash flow plan. What’s a cash flow plan? It’s a monthly budget. You should discipline yourself to create a monthly budget for the rest of your life. You need to name every dollar. Know where your money is going.
If you don’t that extra cash magically disappears. It takes practice to get your cash flow plan right. Don’t get frustrated the first time out. You will forget bills, last-minute trips, and items for the kids. Give it 90 days.
After my first monthly budget, I discovered $500 extra dollars. I applied that to my debts. You can see where you can cut or eliminate bad spending habits and free up that money to accelerate your debt payments. You might also find that you are at a negative cash flow and you need to make some changes quickly.
4. Destroy That First Debt
Now that you have a cash flow plan you need to attack that first debt. I am not going to get all technical and say pay off the highest interest rate first or the highest payment. We want to destroy the smallest debt you have and get a quick victory. You want to gain some momentum.
5. Go Big or Go Home
Up the ante! It’s time to get intense. You have your cash flow plan and you are destroying your debts. To get rid of those debts faster and free up your income you need to find a way to generate an extra $100-$200 extra dollars per month and apply that to your debts. If you can’t generate an extra $100-$200 per month then your dreams of financial freedom goals may be only a pipe dream.
6. Snowball Your Debts
List all of your debts from smallest to highest. Work on the smallest debt first and continue to pay the minimum on the rest. Pay off the first debt then apply that payment to the second debt along with the extra cash you are generating. It will create a snowball effect. Continue to do this until all your debts are paid.
7. Destroying The Big Boys
After you kill your credit card debts and personal loans. You can attack the big boys. Your car note, student loans, and mortgage. Focus is the key. Realize it takes time to become debt-free. The time is going to pass anyway. Might as well start now.
7.5 Start Building Wealth
Now that you are completely debt-free apply all those payments into building your wealth. You can apply those payments to your retirement, marketing campaigns, or save for your children’s college. Make destroying your debts a top priority.
Destroying Your Debts and a Successful Plan to Follow
There are plenty of books and courses out there on personal finance. I chose to enroll in Financial Peace University. and now coordinate classes in my city. I don’t get paid to promote FPU and volunteer because I know how important personal finance is to your family and your business. Find an FPU class or any course in your area if you need extra help.
Keep it simple and take action. Procrastinate and a year from now you wish you would have started.
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