Yesterday, I shared that the US is beginning to go back to our old ways of increasing debt, and that no studio ever needs to be in debt (and showed why). Find that article here: Return of the Killer D.
The truth is that many of us are in debt already, so how do we get out of debt?
Below you’ll see a plan from Dave Ramsey and below that resources from other people (Oprah, Suze Orman and others). Realize though, the most important part to any plan is desire and discipline. All the steps, rules and charts mean nothing if you don’t really want it, and aren’t disciplined enough to get it (and that’s true of anything hard in life).
1 way to get out of debt.
Kia and I have been able to get ourselves out of debt by using a modified version of Dave Ramsey’s 7 Baby Steps.
- Create a $1,000 emergency fund.
- Pay off all debt using the debt snowball.
- Put 3-6 months of income into savings.
- Invest 15% of income pre-tax retirement accounts.
- Create a college fund for your children (or future children).
- Pay off your home.
- Build wealth and give.
Feel free to modify.
However, remember this – one of Ramsey’s principles of life and money is using common sense.
- You can’t live long-term on more money than you bring in.
- You won’t make money without an investment (money, time, work, etc).
- If it sounds too good to be true, than it probably is.
- Etc, etc, etc.
Here is the point. Common sense may tell you to do things a little differently than the exact 7 steps in the exact order that Dave shares.
For instance, Kia and I still have 2 items of debt left – our home and a 27 acre piece of property. We aren’t working hard to pay off this piece of property because we know we will most likely sell it when the land prices come back up. We used extra income first to pay off our other debt, then to create college funds for our kids, and finally to save and invest.
Word of the Year.
My word for the year is Freedom. I want to be free to live life on my terms. I also really want the same for you. Debt slows or stops the ability to live life on my terms.
However you find to do it, get out and stay out of debt.
If you want more help with getting out of debt, check out these resources:
- Dave Ramsey’s website is a great place to start – lots of info for free (that you’ll also find in his books).
- A good section on how to get out of debt on Oprah’s website.
- Read Dave Ramsey’s books:
- Resources and scam reports to getting out of debt.
- Suze Orman’s get out of debt resources.
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