10 Recommendations to Eliminate Debt & Monthly Payments

as a society we have grown to think debt is normal you have to have debt to live you want a car you have to have a car payment to buy a house you need a 30-year mortgage we have to work until we're 70 just to pay off that 30-year mortgage well we have to realize is that the belief that debt is normal is being sold to us they don't even have to keep selling it they just have to convince one generation of people that this is what to do this is normal this is how you get where you need to go and then those people raise children that all that's all they know they only know debt as normal that is the way things are you have to get a credit card and have credit you have to do this and that in order to have all of these things to keep up with your neighbors there is another way and there is a debt free life and more and more people are starting to realize this and come through the fog of what this Society has been teaching us about debt so in today's video we're going to talk about 10 tax to eliminate debt whether that's credit cards car payments student loans home equity loan personal bank loan whatever it may be how to actually get to where oh my goodness I don't have any monthly payments due to anyone the thing about having payments is it isn't just the monetary value that is stressful on your shoulders it is the emotional weight that having those debt payments even multiple ones and getting them every month has on you it's where you feel like and you say this I can't do this because I have these payments I can't I have to go to work because I have these payments I can't make a change in job I can't go back to school we can't have just one person working and one person stay at home to take care of ailing parents or the children because we we have these payments now why is this such a Hot Topic right now obviously debt has been around that's not new but there are two highly publicized headlines that are showing up right now and one is the crazy statistic that credit card balance is just hit a record high of one trillion dollars there was an article in the New York Times that says credit card balances hit new Peak debt Rose to more than one trillion dollars in the second quarter a report found a sign of financial strain for some even before student loan repayments resume the 1 trillion Mark that hit is on the hills of the student loan repayment coming up this is another one of the headlines after the end of three years of student loans being put on pause which means you didn't have to make any payments there wasn't any interest accruing there are 45 million Americans estimated to have student loans and their debt repayments are getting ready to start back up the interest is going to start start accruing again so what this is saying is that people who are already struggling or people who were already you know leveraging and using credit cards up to the mark of one trillion dollars and now about 45 million of those borrowers have these huge monthly payments that are getting ready to start back up there was an article on foxbusiness.com that was titled many student loan borrowers Unsure how they'll restart payments after pause ends the article went on to say in the U.S an average monthly student loan is well above four hundred dollars so it's not surprising to see so many borrowers Express concern about adjusting their budgets when they already feel like they're living paycheck to paycheck to make ends meet the thing about the student loans is more than 99 of the people who had them didn't take advantage of these times span of time where they didn't have any interest accruing instead they replaced that monthly payment with other expenses or other debts I share these because I want to talk about the impact of getting rid of these stresses that are so prominent and are so huge right now I share this because it is time to change our thinking and get rid of these bricks on our shoulders so here is how you can get started in having a life free of payments number one is to admit to the reality of your situation if you don't know my story I was Heavy in debt in my early 20s I know I remember the day despite the location the phone call of when it hit me when I was outside of my apartment and I finally said enough is enough I don't know what to do and I get emotional emotional to this day remembering how I felt and reading those articles about those people who are in debt I remember that feeling and if you've never had that way on you and it's collector's calling and not being able to feel like you breathe you feel like there's an elephant on your chest you have to finally admit it because admitting it makes this pain it Expo it almost releases the emotion and you are able to express it you just have to admit that hey you know the reality is this is where I am this is when I gave in and I said here is where I am I need help you have to admit that you lost control you did too much the thing about this admitting the situation though is now it's over let's sulk and sit in it for about five minutes you know maybe an hour or two but that's all you get that's it now you have to take back control you're going to fix the past you aren't allowed to live and regret though don't live and regret about it it is what it is you can't change the past what matters is what you're going to do going forward listen I understand admitting that failure admitting that mistake is hard it's hard to pop that delusion that any debt is good debt that has been given to us by the market and for anyone who wants to come at me and say yes there's good debt no you're wrong anytime you owe somebody it's not good dad it's not a good thing yes it might help you get a house or a car okay but it's not necessarily a good thing because Leverage equals risk Murphy doesn't play it is a risk a job loss a market shift an injury that cuts off your ability to pay those monthly payments doesn't keep that lender from knocking you on your door asking for their money that looming fear is what you try to hide in your fantasy world when you say there is a good debt number two is an action that we're going to take we're going to audit our debt you have to know where you are to know where you're going you know if you've been to a mall and you've got those Maps they're digital now back in the day they weren't digital but the first thing that you have to do is find that little triangle like no it's a diamond that little Diamond that says you are here because obviously if you want to go to this store it's over here but first I need to know where I am in this Maze of a mall in order to get there you have to know where you are so you know where to go so the first step is your debt and this is this can be a giant tunnel to go down but you've got to list all your debts the first list them out this way okay you want to list it out by debt name who owns the loan and what is it for an example would be uh credit the credit union and the loan is the car then you're going to list the debt amount what is the current balance you might have to call and get that amount interest rate what is the interest rate on that loan okay minimum payment what is the minimum payment on that loan and then you're going to Total it all up now totaling it all up is either going to make you realize it isn't as bad as you were catastrophizing it in your mind or it could be painful either way it is necessary you may have to actually pull up your credit report in order to to get all of the details because there could be some old debts or things you're not realizing on there so that's another way to help you sort through everything if there is a big mess that you have to do but you have to audit your debt and know where you are the third part here is the most under utilized tool I believe that there is out there businesses have to use these so I don't know why more people don't and that is the power of a budget and people go budget listen this is where it is this is the answer this is where you find what you need a lot of people fail to manage money well because they don't pay attention to their money and they just let it go it's not like that it's like a toddler you gotta watch where it's going it's not in high school yet once you've figured out how to manage it properly maybe you can loosen the grips a little bit but people who have a lot of money they're still more benefit there if they have a budget as well this is so important because again it helps you find that extra money that you're going to use to pay off that debt faster this helps you to see where you can cut back where you are overspending it is more than just a plan a good analogy here with a budget is think of opening up a wall you know in your house you open up the drywall to find a link you don't know what you have until you open it up you open it up to see the current state of things what you need to fix is there anything you need to shore up now as far as a method honestly I have done the work for you for me I have tried so many different budgeting methods and the one that works for me is the one that's accessible to me anytime and that is an app that's on my phone I even tried you know the spreadsheet because I love sitting and working on spreadsheets at work and that's part of what I do and but that had too much resistance Beyond being behind a screen all day long the last thing I wanted to do was sit there and write down all of my purchases come home pop the computer open and have to enter them even writing them down you may have seen older videos from me where I've talked about a budget where I had an envelope if you've ever seen the budget methods from Jordan page from fun cheaper free where she tracks other and groceries on literally a mailing envelope that wasn't sustainable I would I would be missing a pen to write it down or lose a receipt the envelope would fall out of my purse I wouldn't have my purse with me but I always had my phone and I use the every dollar app from Dave Ramsey now this thing used to be clunky back in the day I even used it before I did some of these other methods and I just didn't like it because it was clunky but now it is amazing it is super helpful and one of the last times I mentioned this the viewers who were in other countries other than the United States said it wasn't available there so if you would do me a favor if you are in another country and you have a great app that you know it is accessible in your country if you will write it down for others in the comments but where you're from and the app that you recommend that would be extremely helpful now I understand it might be intimidating at first this is the first time you're doing this but all you need to do is start start filling in the blanks especially with something as easy as one of these apps where it's just plug and play what is your income and then what are your fixed monthly expenses like your mortgage your rent your insurance your cell phone the things that are stationary they don't change from there you then move on to things that are more fluctuating like utilities groceries gas look at bank statements credit card statements from the last couple of months to see what an average is and from this you take your income minus those expenses and then you're left with what some like to call the Gap or the margin if there is a buffer between your income and your expenses okay now if there is no space here there is a larger issue there is an income issue a lifestyle issue or both based on any margin you have though so if you do have that margin that money is what you're using to pay down your debts in either your debt snowball or your debt Avalanche method which stay tuned I'll talk more about that here later in the video so you can see the more that you increase that income and the more you reduce those expenses then the more money you have to use to eliminate that debt faster the more margin now I have a ton of videos on my channel as far as ways to reduce your expenses I will list some of those down in the description box below I will also put two in the corners of this video at the end if you want to check those out these are practical things that you can do to reduce the cost of living and effectively live below your means number four here is you have to develop a debt payoff plan make a plan or plan to fail as you probably heard so for someone who has multiple debts a plan like the debt snowball is a really successful plan you pay off your smallest debt first and then you you list them from smallest to largest and the reason this works is human behavior shows that we like to see progress towards our goals if we don't see progress we stop if you don't see weight coming up down on the scale are you really going to continue to work out as hard as you were this is why the snowball method is so successful you want to go with the plan that has quick wins because you're more likely to keep going and finish it you feel the progress the numbers moving down you may have heard of the Avalanche method which lists your debts in most expensive interest rate to lowest interest rate and this often talked about but honestly it doesn't have the quick payoff yes monetarily paying off the interest rate highest loan first will save you money in the long run technically but again think about this if you don't finish it if it isn't sustainable and you give up because you aren't given what again human behavior wants and that's those quick wins does it save you in the long run no because you stop and you keep paying and you don't pay off the debts that you have I'm going to take a sample of scenario to show you about the debt snowball if you are unfamiliar so let's assume you have three debts you have a twenty thousand dollar car loan three thousand dollars on credit cards and a fourteen thousand dollar student loan you're going to put all of your extra money towards the principal balance on the smallest debt first so in this example that's the three thousand dollar credit card you're gonna pay the minimum balance on the student loan and the car loan so let's say your margin gives you 500 that you can pay towards that smallest debt which is the three thousand dollar credit card so you're paying that every month then you get it paid off then what you're going to do is take that 500 and add it to the minimum payment of the next smallest debt which in this scenario is the Fourteen thousand dollar student loan let's assume that you were paying 300 a month towards that student loan so that now new payment of margin is eight hundred dollars towards that student loan so you're going to continue paying from there once you get the student loan paid off you take the eight hundred dollars plus the minimum that you are paying on your car loan and you pay that chunk of amount now keep in mind this is assuming there are no extra incomes or no extra raises during this time which there typically are so as you continue on this and the number of loans you have left go through the amount so you have less loans less numbers of debts because you're paying them off quickly the amount that you're putting towards each of them each month starts getting larger and larger like a snowball and it's a it's a fun thing to look into the future think about this this is a great motivator because this is what your goal is here let's say you get to the end of this scenario that I put in front of you here and you've been chunking away twelve hundred dollars a month and you get all of them paid off now they are paid off look at that huge amount of money you've been putting against that debt each month and now what happens wait a minute now you get to keep it that could be you now that you have an idea of how to put a debt payoff plan into place listen no matter how shocked you were by the amount of debt that you piled up in one of the first steps you will see an immediate reduction in stress once you have a plan in place there is just something about having a plan of action to a problem that immediately alleviates so much stress now listen absolutely everybody's situation is different so how to navigate your plan will depend on your goals and what you can do right now I could spend hours going over different types of scenarios but instead stay tuned to the end of this video the last tip that will give I will give you that help you delve will help you delve deeper into this new debt-free lifestyle but once you start the plan and you start chipping away at this debt the more progress you make the more confident you will feel that it can be done so think of it like a road map that you're create dating number five is being realistic about your lifestyle you almost need to step outside your house and view your current situation as if you were a neighbor looking into their another neighbor's house if you have been living with debt your lifestyle has to change oftentimes debt comes from living above your means thinking if I can make the payment I can get the thing are you still eating out do you have two huge car loans that are taking over a thousand dollars plus a month from your budget is your mortgage a huge percentage of your take-home pay there are there may be large changes in life that you need to make we are now on number six and earlier we talked about those quick wins that progress that as humans we need to fill in order to feel like we're getting somewhere so that we can keep going and number six get quick results how do we do that one of the quickest ways to really make a drastic change is to try what we call here in Frugal life or in the finance Niche on YouTube as a no spend month this helps you break those bad habits quickly it's almost like going cold turkey if you were you're really spending and trust me I was really spendy and you and you do it it will wake you up it will it's like breaking most bad habits it hurts but after a bit you start seeing the light you get the fog is lifted this is such a great way to catapult you into being more intentional about your spending it's a quick way to learn how to say no to yourself and to maybe the little ones in your family now it also causes you to save a huge chunk of money in one month you could end up saving thousand or more dollars that you can put towards debt and possibly knock some of them off immedi immediately with just one month of no spending now on to number seven you know getting into debt is easy and fun what do I mean by that it's it's easy for most people to borrow money it's also fun to get the new thing that you borrowed money for getting out of debt though is not easy there's no magic pill it takes work so for number seven for a time for a season you might need to have another job a side job not just a side hustle that you do like a creative Endeavor but you might actually have to go out and get one at a local store doing stocking shelves something delivering pizza something that gets you immediate quick money So the faster you can get out of that debt that is obviously easy to get into but hard to get out the more likely you are to finish we've established that to this point taking on a side job for a season is an easy way to stack cash and throw at that debt each month now you may be not used to working this much you may be tired after your 40 to 50 hour a week job but the sacrifice you make today will be worth it also the pain of this the sacrifice of working to the ball missing out on some family time for a season is going to be a healthy reminder of what debt did to you and what you had to sacrifice to get out of it number eight is something that I see in society we are lacking now and yeah I'm almost 40 years old I can see now back versus before you know the last decade so and it's taking responsibility for our actions you took out the debt you are responsible for it you cannot depend on anyone or any entity could come and save you or bail you out from it once you take back that responsibility though for something you take ownership over it you take the power back to change your life it's no longer in anybody else's hands and there is something encouraging empowering about that that hey you know what I can do this I don't need anybody else I can do this once you remove the woe is me the I can't get a head mindset stress comes off of you because you are empowered you realize that waiting around and feeling sorry for yourself literally just makes things worse number nine is to finally believe that you can do it I am very big in uh authenticity and one of the reasons I talk about Finance here on YouTube is because because I've been through it I went from growing up we didn't have a lot we had everything we needed absolutely and some of what we wanted and but I had parents who taught me the value of good work and hard work and then I grew up and I bucked against it and I went into debt and I climbed and clawed my way out of it and I've gotten to the point where I have am now and am financially in such a good place I have done the work so I want to show you and tell you that you can do it number eight believe you can do it Oprah Winfrey is quoted to have said this you become what you believe not what you wish or want but what you truly believe wherever you are in life look at your beliefs they put you there I am telling you you can do it I recently had a viewer send me a comment and I was so thankful that she did and she let me know that she had just paid off her mortgage she said she'd been watching my videos for years and so a few years ago she was hearing me and she heard me talk about it and she said you know what if she can do it I can do it and she then did it she even did it faster than I did I am so happy for her but that is just one of the many things that once you believe you can do something watch it happen number 10 is keep going past this video you've got to keep going and digging this is such a complex topic and everyone has different scenarios there might be some Nuance of yours that you need more clarification or help on a step and I can't cover that in a 20 30 minute video so I want to give you some of a few resources that have helped me that I believe in that I know have helped me get where I am that I still listen to today and these people have books podcasts that will help you continue to learn and immerse yourself in this newfound lifestyle now one of the I'm going to go from the ones that I found recently to the ones that I've known forever one that's not heard of very has not really popped on the scene but I promise he will is Dr Benjamin Hardy and he's a young aeropsychologist he's a doctor obviously a doctorate and I have read four of his books um three of them I've read twice one of them I'm on my third of reading and this is in the last four months since I found him that is how impactful some of his messages are and isn't just about that it's not about finances really at all it's about mindset and and the the thought into it and actually looking at things from a different perspective the one book that I highly recommend first would be be your future self now that is the first one that I read and then I went down the rabbit hole great book he also has a YouTube YouTube channel that you can check out Dr Benjamin Hardy the other one is remit Sethi and he has there's a documentary on Netflix or like a a show series of show where he goes through people's debt and talks to them about it but he also has a book I will teach you to to be rich and it's like what is your rich life check that one out and then the one that I will spout for the rest of my life it's the book that changed my life that really opened back up what I had grown up listening to but added it on top of a complex Nuance of today's society of seeing more of people's lives and that is love your life not theirs by Rachel Cruz Rachel Cruz is Dave Ramsey's daughter that book hits the emotional side of comparisons and will change your life as far as that goes to be honest um and then there's obviously Dave Ramsey if you're starting out and you want the you want the best method that my personal opinion I'm not affiliated with Ramsey somebody asked that question whatsoever but I wholeheartedly believe in the technique I didn't know about the technique when I was going through my debt free Journey but my journey of paying off in my early 20s I wish I had probably would have helped me get there faster and made better decisions but The Total Money Makeover is the place to start to get the actual good practical tips that millions of people have used to become debt free I hope you enjoyed this video if you did and you want to share this with other people to help spread this world this thought that we can get past this culture of debt then share this video click on that like button down below subscribe to the channel if you haven't already it's completely free you just have to hit the Subscribe button and all that does is put my videos over in the tab of your subscriptions if you go on YouTube and you're looking for something to watch that way you can see my latest video so I hope that you do that and I hope to see you on the next video

Channel: JENNIFER COOK

Views: 25,140

Keywords: debt, debt free, student loan debt, frugal living, how to get out of debt quickly, how to get out of debt quiick

Id: A0AZHkzR1ic

Length: 26min 54sec (1614 seconds)

Published: Sun Sep 03 2023