How serious are you about getting out of debt? Well if you follow the debt rules you will hopefully kick American Express to the curb and drown discover card in the fish tank. The secret to the debt rules I will share with all of you today is first a disgusting desire to be free from all of these imaginary bosses telling you where to send those fabulous green dollars.
Do you want to continuously fund the credit card companies profit margin or would you rather increase your household profit margin? I think we all know the answer to that question, but it will take a long time coupled with an intense commitment to complete your debt repayment journey. If you are willing to step up and live life far from the average person then follow the debt rules below I will lay out for all of you. I will tell you a few strategies and far from average methods, but ultimately it will all be worthwhile.
The Debt Rules:
There is no such thing as good debt
Avoid all forms of debt
Credit Card Debt is the most expensive, but the easiest to negotiate and eliminate
Only use 0% balance transfers to get rid of 75% or more of another debt –Avoid Cash flow problems
Car loan debt can be inexpensive, but can lead to repossession (A major credit ding)
School Loan debt is the most dangerous, because it can never be discharged in bankruptcy.
School Loan debt is the debt that can garnish wages quickest and without much effort
Mortgage debt is OK as long as you can keep payments under 35% Net pay. (Not Gross Pay)
If possible take the least amount of Mortgage repayment terms – 10 to 20 years. (If within rule above)
If you desire to do a 0% balance transfer debt without repaying off the entire loan you will have to pay two creditors every month
The best way for debt freedom is the debt snowball (Pay minimum on all debt, pay the most on the smallest balance debt)
While paying down debt do not charge new debt or accumulate points
While paying down debt avoid major budget busters (Vacations or Holiday spending)
Eliminate extravagant purchases and services during the debt repayment phase
Send as much as possible towards all the debt.
Increase income to use towards debt repayments (side hustles and overtime)
Do not invest before getting rid of all non-mortgage debt, besides up to the 401K match at work.
Use about 5% of blow money to spend on anything as to not lose motivation
If you do not agree with all the debt rules then just pick and choose those that work best for you. If you have a plan that is currently not working for you, then shift gears and try this plan. I can help if you email me with any questions you have regarding the debt rules above. If you start this debt payoff journey as a project just like you would for school with the mindset that it must get done in order to pass the class, then you will most likely succeed. Just make it fun and celebrate along a little every time you get a creditor off your back. The commitment will be tough, and it might test you after you have a few wins. Just maintain focus and in due time you can succeed with eliminating debt.
Comment if you have any debt rules you would like to share?
Rich Uncle EL
I definitely need to apply some of these rules in my life so that I too can be freed from the monthly payment plans.
Yes everytime you sign up for a new credit card or another obligation, it is like having a new boss tell you where to send your hard earned money. I like the freedom to do as I please with my income. By saying no from time to time to living above your means you can stop the debt cycle.