Financial Education Course – Step #4
How to Eliminate Debt – Debt Management
Let’s start off with some statistics:
- 80% of American adults are in DEBT.
- 50%+ own a Credit Card.
- $8,284 is the Average Credit Card Debt per Household
I’m assuming that a lot of people will have credit card, student loan, or some kind of debt that contributes to THAT DEBT.
This entire post is all about Debt Management.
If you have credit card debt and you need help, send me an email. I got partners that help negotiate with credit card companies to reduce the debt and remove the interest with a payment plan. We’ll see if we can help you with that. Otherwise, you can use the debt management techniques taught in my ebook, Leverage, which you can get for free here.
YOUR DREAMS IS BEING SUFFOCATED BY YOUR DEBT. WE NEED TO DO SOMETHING ABOUT THAT.
How to Eliminate Debt Steps
Here are some steps you should take to eliminate debt:
- Make a list of what you owe (i.e. credit cards and loans, their interest rates, their balances, their monthly payments, and their monthly due dates)
- Don’t make late payments – It ruins your credit score.
- Pay one debt at a time – the debt with the HIGHEST INTEREST RATE or SMALLEST BALANCE FIRST.
- Cancel Subscriptions like Netflix and STOP USING CREDIT CARDS (you won’t be in this situation if you know how to use credit cards correctly)
- Refinance Mortgages and Car Loans
One thing about late payments is that you should always be on top of your debt and never make late payments. It ruins your credit score. That means, if you ever went in and asked for a loan, you will either get rejected or be hit with very high interest rates.
Keep that credit score HIGH at all costs.
To give you an example of why credit is important, whenever I need more credit and need to apply for credit cards, I usually get approved immediately or very easily because my credit score is around 750.
How to Eliminate Credit Card Debt
Here’s an example.
You have a credit card with a $10,000 balance on it with a high interest rate; let’s say 20%. What you can do is get another credit card with 0% intro APR offer, and live off that new credit card, while paying off the $10,000 credit card with all your resources.
Every single dollar you earn goes to paying off that debt with 20% interest. After you’re done that, you’ll most likely still have time to save some money to pay off the debt accrued in that 0% intro APR card. 0% is usually only for 12 months. After that, you pay the normal interest rate on the card.
Even though, you have 0% APR, you still have to make minimum payments, which is like 1% of the balance.
You have to be super disciplined with this approach, because if you don’t do it right. You’ll be screwed.
AMEX Business Platinum
Here’s a personal example, I was approved for an AMEX Business Platinum credit card. It requires spending $15,000 to get the sign on bonus. I will view that $15,000 as debt I need to pay off.
What I’m doing is I’m applying for a Chase Business Ink Unlimited card which offers 0% Intro APR for 12 months. I don’t have to pay interest for an entire year on CBIU.
I will live off that credit card, while I’m paying off my AMEX’s $15,000 debt.
At the end of it, I will have paid off my AMEX debt and CBIU debt because I used all my resources on paying off my AMEX debt and I wouldn’t have spent on anything other than groceries on my CBIU card, which makes the balance on my CBIU card relatively small.
Financial Education Course – Step #4
Increase Your Cash Flow
- Make a budget, stick to it.
- Refinance to try to get lower payments
- Retarget your cash to higher interest accounts and/or investments
- Build a side hustle
- Own a business and write off expenses
As a side note, what do you think Coursehack is? It’s an LLC. Although, we write blogs and make Youtube videos, the main point is to have it allow me to write off expenses.
Conclusion: How to Eliminate Debt Recap
Today was a lot, so let’s make a quick recap:
- 80% of American adults are in DEBT.
- 50%+ own a Credit Card.
- $8,284 is the Average Credit Card Debt per Household.
- Make a list of all your debts.
- Don’t make late payments because it ruins credit score.
- Pay on debt at a time, either the one with the highest interest rate or the one with the smallest balance first.
- We ran through some examples on how to reduce credit card debt.
- We ran through some ways to increase your cash flow.
That’s it for today Coursehackers, if you want more, then be sure to get our FREE eBook, LEVERAGE. You won’t regret it and it sells for $9.99 on Amazon.
Now, say it with me…
Continue sharing your way to success,
Donald