Get Out of Debt Faster: The Simple Debt Payoff Plan That Finally Works | 573

0:00We are on system two, the good plan, which stands for get out of debt. get out of debt. I made a jingle. You're welcome. You're going to stop giving all the way your hard-earned money. That's the plan here. That's what we're going to do. You're going to learn with this system exactly how to get out of debt. And what I think is really fun is when you're going to be able to get out of debt. Yeah. You're going to just, you're going to see all the money that's going to be put back in your pocket because it's your money and you don't want to just keep giving it away. Right. So let's talk about some wrong ways.

0:27What are some things that people are doing wrong in their life? Especially considering debt. We'll talk about it. We'll niche it down a a little bit. Do you make good money but have nothing to show for it? Are you tired of living paycheck to paycheck? Do you have big dreams for your financial future? Do you want to get debt free but you don't want to live on beans and rice? Or you don't want to give up those pumpkin spice lattes? If you don't already know how to budget or if you're using credit cards to get through the money? If you want to seem like you have your finances all together or you're not on the same page with your spouse when it comes to finances?

0:58We know what you're doing probably isn't working but guess what? You're in the right place. We're Shana and Vanessa. We're best friends, business partners, and master financial coaches trained by Dave Ramsey. We've been in business since 2019, helping hundreds of amazing people like you create budgets, get out of debt, stop living paycheck to paycheck, and know exactly what to do with their money. In this podcast, we'll share with you everything we know plus everything we're working on with our clients so that you have the best chance at reaching your financial goals. We want to help you take the guesswork out of your budget, improve your marriages and even bring your kids in on a conversation.

1:33We can help you no matter where you're at, whether you're the single mom who's never had$500 in her savings account or the millionaire who's paid off four real estate mortgages. And we're not going to shy away from the tough love. We'll tell you what you need to hear and encourage you at the same time. This is the Financial Coaching for Women podcast. All right. You're paying too much in minimum payments, right? So yeah, it's a couple of clients that are paying more in debt than they're like living off of with their expenses. So we You're paying those minimum payments, which is what the company wants, because then you'll just do it for the rest of your life.

2:05They don't structure the minimum payment so that you can pay it off. They structure those so that you'll keep paying interest to them for the rest of their life, which they excited about because the interest is probably way more than you actually owe them principal anyway. This is their plan. Yeah. And this is what people are doing. We had a client, what she said, was a$7 payment for like six years. For the rest of her life. It was fine. Yeah. Anyways, had she just paid it off, it was like$500 or something. It was crazy. Another thing that even our savvy clients try to do is, I'll just pay a little bit more on all of these.

2:33A little bit more here. Yeah. I'm just going to add$20 to each payment or something ridiculous like that. And it doesn't work that way. That's not correct. You'll never get anywhere that way. So another... Don't do this. This is what people are doing. They're using one debt to pay for another debt, and it's just the worst thing. So don't do that. Yeah. Oh, when they're continuing to fund purchases with debt. So this is the other thing. Oh, I'm working to pay off this other credit card. Let me use this other one. If you're just adding to debt anyway. So when you do this, you have to make the decision, I'm going to stop using debt totally so that this progress I'm making is worth it, right?

3:06Yeah. And then some people, they're worrying more about interest rates than their behavior, right? So they're trying to figure out which ones to pay off that have the highest interest rates instead of just not using them. So that's the idea is what we want you to do is pay off the smallest ones first. So that way you can do the domino effect, but they want to pay off the ones with the highest interest rates, which usually have the highest balance. But then you're not going anywhere. Then you're just continuing to pay off debt and you don't really feel any progress. And so you just feel defeated.

3:31And then another thing that people are doing wrong is they're paying off debt with anything they find left over in their account at the end of the month. Leftover. Which is a joke. Let's talk about that. But it's not the right priority. So that's not the right way to do it. Putting the debt, paying off debt last, you're going to put that first when you're doing it the right way. If it's something that's important to you, it's something you're going to make sure that happens. So when people are doing getting out of debt the right way, they understand that if they can't afford it, if they can't pay for it and hand over cash for it, that means they can't afford it.

4:01That is the definition of not being able to afford it is you don't have the money for it. Going and borrowing someone else's money to pay for it doesn't mean you could afford it. It means they could afford it. Not you. It's a little different. Yeah. All right. And so we want you to focus on the small wins. We want you to focus on paying off small debts first so you can knock out the$200,$300,$400,$500 debts. And so that way, when you start dominoing their minimum payments on top of each other, then you realize that now you have$100 to put towards this next debt plus that minimum payment. So if you focus on the small wins and you have success with those, then you're going to feel more careful to be able to conquer the bigger ones.

4:36But if you're just paying off the big ones first, you're never going to feel like you're getting anywhere. Yeah. And you're going to, this is what's going to help you being, you're going to be focused on the behavior change. and making progress than other people. So they think they're smarter than the system and they're going to use their brain and they're going to figure it out. But that's not, if you were good at math already, you wouldn't be in debt. Sorry. Oh gosh, that was mean. Well, and if you don't like the system, it's fine to go back to what you're doing because it was obviously working.

5:01Maybe it wasn't right. Right. And we just want you to see it for a different way. I was telling a new client this weekend, I'm like, we love coming in with a different perspective. We are not close to your money. We are not close to your finances. and so we can say things and see things in a different light that you can't yeah and so we would just urge you to just take some of these suggestions and put them into place and see how much of a difference it can make in your life yep and so the other another thing to do when you're doing it the right way is to target all of your available resources toward one goal at a time so people will try to i'm going to pay off a couple debts at a time and i'm also going to invest and oh by the way i need to save for vacation and also i need to get a new car because obviously i deserve it.

5:40And then all of these other things are, you're putting a little bit of money toward everything and not making progress on anything. So what you want to do instead is focus all of your energy, your time, your effort, your money on one goal, crush it, and then move on to the next one and do that as you go. And you're just going to keep winning. Right. So think about, she's talked about paying off four different things. So you take this amount, put it on this amount, put it in. If you focus all your money on one thing, you're taking that one thing so much further than all four of these could do at the same time.

6:07Right. Yeah. And I think another thing that people do that is right is tracking your progress every step of the way. This goes along with celebrating those big and small wins, but just tracking the progress. You can't manage what you don't measure. And if you're measuring, that's just going to help you again with that behavior modification, again with those rewards. You're going to see the progress and it's going to keep the momentum high. This is one of the things that when we do budgets every month with our clients, it's like, listen, did you know you paid off$18 ,000 in six months? Because we're tracking that.

6:38We were showing you your progress. And it's really fun to be able to show them that. And so you guys will see that too. When you start tracking and say, okay, this is our starting point. And then five, six months later, this is where we're at. It's going to be huge. Yep. All right, budget besties, it's time for some real talk. You don't need another budget. You need a budget system. Our simplified budget system is what you've been looking for. It's going to allow you to be bougie on a budget. You'll be able to easily set up a system that runs automatically and shows you exactly where your money is going.

7:10And it's going to give you permission to spend. Everybody loves that. It's straightforward, pretty, and packed with walk-through videos that break down the exact methods we use with our clients to get out of debt, set up a bills account, separate spending, build savings buckets, and end the paycheck-to-paycheck feel. If you're new to budgeting, this is the perfect way to jump in. And if you're already a budget nerd like us, you're about to meet your new obsession. This is the upgrade to your finances that you need. Now back to today's show. All right. So how do we do this? The first thing you're going to do is go back to the rolling budget.

7:44If you haven't done that, set up your budget, your monthly budget, and it's going to be amazing. It's going to be the first step always. Yes, it is. And then the second step is going to be, guess what? Cut up all your credit cards and stop using any of your loans. And you have to call and close accounts if they're just sitting there open. Sometimes they'll let you close or lock accounts, even if they're still a balanced, make it to where you're not you can't use it anymore and so you i would really urge you to do that and so why why why do all this because you can't get out of debt if you continue to use debt so the number one rule to get out of debt is to borrow no more yeah so that's what we're teaching y 'all to do because you're going to have your emergency fund set aside yep and you don't need that you're going to be able to pay it all off and have all this money in your bank and you're going to be your own bank in your own insurance policy all that stuff you've got to stop borrowing.

8:32Yeah. Yeah. It's really important. And you do have to cut them up because it's kind of fun. Take your aggression and anger at us for making you cut them up and take it out on the credit card and cut it up. And it's going to be it's just another one of those behavior modification. It's a step. It's a symbol that you're doing these things. And it's just going to be great. And also you can send them to us because we have a jar full of cut up credit cards and we like to collect it because it's bringing us joy. Yes, it does. And we there are some of them that are metal. We get that. We see those burn those babies and or maybe put them on the target in your backyard and you can shoot them.

9:04Oh, that's a good plan. Oh, that's a good plan for the good plan. Yes. I like it. All right. So next, this is going to be the you already did this, but if you're going to make sure you've got it all correct, you're going to list out every debt, balance, minimum amount, due dates, smallest to largest now. Right. We're going to make sure we're putting it the smallest balance to the largest balance all the way down again, because that's how you're going to be paying them. So you want to go ahead and list them that way. All right. The fourth thing is to use your budget to determine how much extra that you can put towards your debt.

9:32So remember, we said every dollar is going to be given a job in your budget. So after you've listed out your monthly bills, your debt payments, your monthly expenses, what is left over? Because remember, we're not trying to fund a million things. We're trying to just take care of debt right now. So say you have$500 left over in your budget after you've marked everything down. So you're going to find out how much exactly you have and you're going to add that to guess what? The smallest payment. Yep. And then from there, you're going to pay off one debt at a time, smallest to largest. And then you're going to take, when you pay one off, you're going to take that minimum payment, add it to that extra that you have, and then put it on the next debt.

10:06Right. And you're just going to keep doing that one debt at a time. And you're going to work your way down your list. Yeah. And the next way to help pay off debt is to brainstorm ways that you can knock out debt sooner. So we're talking about side hustles, part-time jobs, have a garage sale. Well, maybe think about downsizing. This was something that my husband and I did, and it drastically changed our lives, and we loved it so much. So there are many different ways that you can help increase your income. Make that go faster. Yes, and so that way you can get where you want to be sooner. And again, that's not forever.

10:35It's not like you have two jobs forever. But if you just want to speed through this, there might be some other things that you can do that you wouldn't normally do just to get through it. And then from there, with all of this information, you're going to be able to calculate basically how long it's going to take you to get out of debt. So you can just go through that, seeing that snowball system in effect. How long is it really going to take me to pay off all of these debts? And that might motivate you to downsize home, downsize car, or get that second job, or have a garage sale. Because it's like, ooh, I could do this faster.

11:04It won't take as long if I do this. So just looking at that so you can see that light at the end of the tunnel, it'll be good to do. Yeah. And then maybe print out your debt tracker. So what you want to do is you want to be able to see it. So you want to figure out where am I going? How long is it going to take me? And so once you do that, then you want to see. You want to have it visual. So we recommend putting it on your refrigerator, maybe putting it in your bedroom. We have some people, I think they would write the amounts on their mirror in their bathroom. Every time they would have a new debt amount, they would write it out and they would cross it off or write a new one.

11:30So there's many ways that you can track this. But the biggest thing is that you track it. We talked about this in our system one. So system two is no different. We want to track your debts as well. Yeah. And so getting out of debt is so liberating. So most people assume that they're just going to have payments for the rest of their life. And so what we like to do with clients is once they get through that first step of listing everything out, add up all of those minimum payments, which is on our budget. We just have a nice little rude number that adds up all of their minimum payments for the month.

11:55And so what could you be doing without those with that money if they weren't going to debt? And there's some of you could be like vacationing baller style if you didn't have that amount of minimum payments every month. Right. And so it's just so liberating. And you'll be able to bring that money in and stop giving it away to stuff that happened in the past. You can fund your future instead, which is really way more exciting. I promise. Even phone payments. So the phone companies aren't stupid. They add your phone payment into your bill, right? So even if you pay off that early, your phone bill is going to go down.

12:25So now you have a smaller expense each month. So even those things, like really try to figure out where everything is and how much you have lingering out there in debt and pay it off so that you have more money back in your pocket each month. If you make good money but have nothing to show for it, this quiz will help you figure out what's really going on with your money. and what your next step should be. You'll get a personalized result and a simple action step to help you feel more organized and less stressed. Go to budgetbesties.com forward slash quiz and take the free quiz today. That's budgetbesties.com forward slash quiz to find out what's really going on with your money.