When we wrote our course “Paid In Full” we didn’t try to make it 500 pages long with 20 chapters of the most steps we could create to get people out of debt. Life is complicated enough without discouraging people more. As a single parent I had been desperate enough to know that no one wants to spend the longest time possible to become debt free. After over 20 years of counseling more than 20,000 cllients to financial recovery, we still hold to our three basic steps: Earn all you can; Spend less than you earn; Use excess to eliminate debt.
1st Earn All You Can: You cannot spend the same dollar twice! Of course, this information requires that you have documented all your income and expenses and actually know where every dollar has gone. Start with a detailed budget sheet, what we call a Spending Plan (not as negative). Re-evaluate your expenses. Eliminate things you could live without, at least temporarily. Find or create extra income. If you are unwilling to reduce your lifestyle or simply can’t, a few part-time hours a week could take the edge off of your spending sheet: groceries, gas, utilities, childcare.
Recovery actually gives you a chance to Re-Do! Start with the end in mind. What kind of new lifestyle do you want to design? What Is that amount of income sufficient for the lifestyle? Do a talent inventory to discover what other strengths or skills you have that have been dusty. What part time work could you do in another area that you enjoy but chose to not do for a career? Consider your passions, hobbies, skills, and even jobs you would enjoy as a volunteer. We provide a Personality Profile which can help you and your household better identify attitudes and strengths. Many have discovered passions for new career and business paths.
2nd Spend Less Than You Earn: Be honest with yourself. You cannot do all this cutting, squeaking, and sacrificing only to continue spending every dollar you bring home. The Game Plan is to be so busy working and making money that you don’t have time to count it, much less spend it! So, back to that Budget/Spending Sheet, do a weekly, then monthly comparison of your spending, always skimming to the “Least you can spend and get by.” (Watch for Leaky Vessels that sink your wallet!) If you need a really aggressive recovery, downsize your living space, take in a responsible renter (No Family Members!), and/or do an even trade in for your vehicle for a less costly one. Your pride may suffer initially, but keep your desired Lifestyle Image posted where you can build on it daily.
3rd Use Excess to Eliminate Debt: Every Dollar On Purpose! List all your debts, expenses, and bills and the amount paid on each per month from most to least critical. Are you paying more than necessary on some? Can you double payments toward a high interest debt? Check your Credit Report and your Credit Score. Work quickly with our Financial Advisors to dispute and clear any bad or mistaken debt on your report. Work diligently to raise your Credit Score as that will establish lower interest rates and better terms for future loans. Set your payments for automatic deduct from your checking or paycheck. As you begin paying off debts, transfer 5% of the excess into an untouchable Savings account and the rest onto the next targeted debt. This will help you develop the habit of Paying Yourself First!
Whether you plan to work on Financial Re-Design for several months, or several years, your DebtFree goal must never change. Giving-in or giving-up could propel you back even further in financial disaster than where you are currently recovering. Buying a home, owning your business, starting a family, going back to school, and any other goal you could name is certainly worth an up-front sacrifice. You are the final and deciding component of this personal business contract. You owe it to yourself to succeed in this plan. Let’s finish this year empowered to succeed! Every Dollar On Purpose, For a Purpose!