Crush Your Debt
we're now going to tackle debt, which I'm gonna do my best to make tackling debt. Actually, sexy. It's tough to talk about death because death is totally negative. Depressing, Not fun to deal with. But we're gonna talk about how do you crush your debt? What I'm gonna go through with you is really kind of what I use. But then also, when I started teaching on how to deal with this debt So how do you deal with credit card debt? First step, you do have to actually know what you so credit card debt typically is a form of its denial. Like me. It really is right because you're running up. These cards have two or three cars. You max that card out. You put that card away, you get another card. You got different statements coming in. You don't usually know what you so like. It's like know what you owe. So how do you know what you will you have to like, actually add it all up, which is not complicated? It's called Take out of hell about a paper. Write it all down or use a mint dot com, but see it...
every day what it is, you o and I'm gonna show you a little system called gulp where I actually had people put this stuff, like, on the refrigerator or on the wall in their kitchen. So they come in and it's right there and they see what they are. So what is the fact? The fact is, dead is dead. It's just interest rate that can crush you. Um, you gotta figure out. So I called the debt reality worksheet otherwise known in the automatic millionaire as the section we call dope. So if you've been following me for a while, you know, I have this thing I teach called gulp told stands for dead on last payment, which I now changed to done on last payment. Because in this day and age, a lot of people don't like the word dead. So it's done so done on last payment. There's a form in this book that walked you through the entire process. Adult. We also gave it to you on your pdf handout. Here's all you dio. Do you take your credit cards? You line them up. You put the name of the credit card. You put the account number you put the outstanding balance, you put the monthly minimum payment and you put the interest rate. Now the dope system helps you calculate which credit card should I pay off first for this class without you having to read the whole chapter, I'm gonna keep a little bit simpler and just tell you this. You're if you have five credit cards. How many of you know somebody who has five credit cards? I'm asking if you know if it's you personally. You know people have more than five credit cards. Here's what you do. You line all the credit cards up. You make minimum payments on every card except you take this smallest credit card you have. So let's say you have five credit cards. This one's 500 this one's 1000. This one's 1500. This was 3000 schools. 5000. You take your smallest credit card. You make all the extra payments on the smallest cart. Some people call this the snowball approach by paying off the smallest card. First, I gave you a mathematical formula on how to do this. You're basically dividing the minimum payments by the card to come up with the amount of payments that are left, but usually it's the smallest card, so if you take it the smallest card and you're gonna paid off now you've gone from five cards to four cards. Then you go the next card. You go from four cards to three cards. Three cards, 22 cards. There's three reasons why you do it this way. Come one. By reducing credit cards, you reduce the possibility of having late fees. So even though I taught you in earlier lesson to automate your minimum payments, I'm a realist, and I know that not everyone is going to do it. So the sooner you reduce the amount of card you have, the less likelihood you will have of the late. Think it's number one. It's a huge thing. Number two. It's psychological because credit card debt is incredibly negative and it is depressing and it is overwhelming. And if you have five or six or seven or eight credit cards and you start to see yourself reduce the credit card you have, it's like a giant checkoff box. It feels good and you start to feel yourself. Okay, I can do this. I've seen people who we've worked with you had 16 17 18 19 cards. So here's how you get a debt fast. A ticket. Typical credit card. Well, typical credit card. Family. Average family. Roughly $16,000 in credit card debt. 22% is about the average right now. Rate. Four credit cards. Summer's high is 29%. Some are lower, but 22% sort average. So I went to river Those calculators I gave you before I went to bank Rate. Just plug the number in bankrate dot com. Tell me, how long will it take me to pay this card off? The minimum payment is $453. If I make minimum payments, we make sure I understand this, right? Are you really telling me that if I make minimum payments, it's gonna take How long? What's this anther 33 years, I'm going to spend $28,000 interest payments for $16,000 purchases at 16 plus 28. Right? You guys follow that. That's just interest. What if I found my lot a factor that David Bach hammered me on in an earlier lesson and I took $10 a day, and I took that $10 and I added it on top of my minimum payments. So again, real simple. I went to bank rate calculator around the numbers. $10 a day. Repayments of $753. They had 300 bucks to this. That credit card is no paid off in two years. It's incredible, right? The Dole worksheet again. Outstanding balance. Minimum payments. When's it due? The dull numbers 10 is basically taking your monthly payment body. And by 500 get 10. Now, I know that this is the first card to pay off. What I said you, though, is in almost every case, it's just smallest account. So this gets confusing. Just take your smallest account. All right, The next thing you wanted to step three, you gotta get your rates lower. Good news. Here is Rachel Low right now. Um, unless you're rate teaser rates up. So, like a new card, you're a could be 02345% after a year or two years. Now it's 19%. I just got all my new little things because I got all those new frequent flyer cards. Two years ago when they were given 50,000 points. I was like, You don't take 123 So they were all zero. Now they're all 18.97%. I always find that. I mean, I'll update you. Thanks for the update. Um, so call your company today. How do you get your rates lowered? You can call the company. You can ask for a lower rate. This used to be easier than it is today. I'm not gonna kid you. So in a way, I hate giving out these websites because they don't want you going shopping for more credit. But if you have a credit card where the rate is high, I'd rather have you get a new card provided you can transfer it without fees and penalties. So bankrate dot com credit cards dot com low cards dot com Three great websites with lots of options. Okay, So what if you need real credit card help and you can't do this yourself? I recommend people go to the f. C. C. This is the National Foundation for Credit or counseling. Um, go to their website, which is debt advice dot or I'm sorry, nfcc dot ord. They will connect you with a nonprofit consumer credit card counselor in your area, and I've seen these organizations help A lot of people really have the key to a nonprofit credit card. Consumer Council group is finding a legitimate one.