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This is Optimal Finance Daily, episode

1:01

2676. Climb

1:03

out of massive debt with these 10

1:05

life-changing steps by Andy

1:07

Hill of marriagekidsandmoney.com. And

1:10

I'm your host and personal finance enthusiast,

1:13

Diana Merriam. This is the

1:15

show where I serenade you with the sweet sounds

1:17

of personal finance knowledge from some of the best

1:19

blogs on the planet. With the author's

1:21

permission, of course. And we're

1:24

going to get right to today's post as we optimize

1:26

your life. Climb

1:31

out of massive debt with these

1:33

10 life-changing steps by

1:35

Andy Hill of marriagekidsandmoney.com. When

1:39

someone has a large amount of debt, finding

1:42

a way out can feel impossible. The

1:44

scattered accounts, the interest rates, and the

1:46

stress of keeping up with the day-to-day

1:48

expenses of life are enough to drive

1:51

us crazy. After interviewing

1:53

around a hundred individuals who have conquered

1:55

their debt and moved on to building

1:57

wealth, I've learned what it takes to

1:59

say goodbye. buy to debt forever. Here

2:02

are the 10 life-changing steps that

2:04

came up repeatedly throughout my interviews.

2:08

Number one, fully commit to debt

2:10

freedom. When you've simply

2:12

had enough of your giant pile of debt,

2:15

it's time to truly declare that you're ready

2:17

to clean it up. Tell

2:19

your spouse, proclaim it to your

2:21

friends, or even shout it out loud on

2:24

an awesome podcast. Most importantly,

2:26

commit to yourself that you will

2:28

make a change today. Like

2:30

any other monumental moment in your

2:33

life, declaring your intention is the

2:35

first step towards making the impossible

2:37

possible. Commit to

2:39

doing something incredible today. Number

2:42

two, analyze your debts. Gather

2:45

all the information about your current debts and lay it

2:47

all out on the table. You want

2:49

to understand two important details,

2:51

your current balance and your

2:53

interest rate. Number three,

2:56

create a budget. When

2:58

you have your income and your expenses all

3:00

laid out in a budget for the first

3:02

time, you get a sense of control that

3:04

you've never had before. This simple

3:06

action will put you in charge of

3:08

your money instead of the other way

3:10

around. I've used Mint for

3:13

over five years to manage my family's budget.

3:15

It's helped my wife and I

3:17

do some amazing things like communicate

3:20

openly about our finances, plan our

3:22

future together, and even destroy our

3:24

mortgage in less than five years.

3:26

If you're more into spreadsheets than

3:29

online systems, check out Tiller. It

3:31

helps you easily track your spending and even

3:33

syncs up your accounts to make the budgeting

3:36

process simple. Number

3:38

four, choose your debt

3:40

destruction method. Once

3:42

you understand your debts and how much

3:44

you owe, it's time to destroy the

3:46

enemy. Sorry, debt, you're the enemy. When

3:49

you're combating your enemy, you need a

3:51

good battle strategy. Here are

3:54

three to consider. Debt

3:56

snowball. How does it work? Line

3:59

up your debts from... smallest balance to largest

4:01

balance. Pay off the smallest

4:03

one first, then move on to the

4:05

next until you're debt free. Why

4:08

does it work? This is a

4:10

proven method that keeps you motivated to press

4:12

on. By getting a quick win,

4:14

you'll be excited to continue crushing your debt.

4:17

Debt avalanche. How does it

4:19

work? Line up all your

4:21

debts from the largest interest rate to the

4:23

smallest interest rate. Pay off the

4:26

debt with the largest interest rate first, then

4:28

move on to the next one until you

4:30

owe no one a single dime. Why

4:33

does it work? Where the

4:35

debt snowball is more emotionally driven,

4:38

the avalanche works best for those of

4:40

us who see the benefit of paying

4:42

less interest immediately. Debt

4:44

hatred. How does it work? Line

4:47

up all your debts from the one you hate the

4:49

most to the one you hate the least. Pay

4:52

off the debt that makes you the angriest,

4:54

then move on to the next one until

4:56

you're debt free and happy. Why

4:58

does it work? Paying off a

5:01

boatload of debt is going to be

5:03

an emotional marathon for you. A clobbering

5:05

your biggest debt villain first, the ones

5:07

that follow won't seem so tough to

5:09

beat. Number five,

5:12

decrease your expenses. You

5:15

might be saying, this all sounds well and

5:17

good, but based on my budget, I'm spending

5:19

more than I'm making. Congratulations,

5:21

you've uncovered your first major

5:23

problem to solve. If

5:25

you're spending more than you're bringing in, it's time

5:27

for a gut check. Do

5:29

you care more about Amazon Prime

5:31

or insert any other unnecessary expense

5:33

than your debt freedom? No,

5:36

then it's time to get rid of it. Here

5:38

are 10 quick areas that you could consider

5:40

trimming. Grocery spending,

5:43

cable package, cell phone

5:45

plan, entertainment subscriptions,

5:49

gym memberships, expensive

5:51

hobbies like golf, et cetera, alcohol

5:54

and cigarettes, eating at

5:56

restaurants, non-essential shopping like

5:58

for decor or extra. clothes

6:01

and Amazon gadgets. Number

6:03

six, learn to say no. When

6:07

you're working on becoming debt-free you're simply going

6:09

to have to say no more. You

6:11

won't be able to buy as many things and

6:13

you may have to miss out on some potentially

6:15

fun upcoming events. Realize now

6:17

when you're saying no to some things

6:20

you're saying yes to debt freedom. You're

6:22

saying yes to less stress, less worry

6:24

and more control. Number

6:26

seven, increase your income. If

6:30

spending isn't your issue then perhaps income

6:32

is. It's time to become a

6:34

magnet for money. Increasing your

6:36

income is not only a great way

6:38

to eliminate debt in the short term

6:41

but long term it's the way of

6:43

the wealthy. You might as well start

6:45

practicing being a millionaire now because that's where

6:47

you'll be headed if you keep it up.

6:50

One of the best ways to make quick money

6:52

is with your current employer. If

6:54

you're exceeding expectations at work ask

6:56

for a salary increase. If

6:59

you're not exceeding expectations you should start.

7:02

Additionally consider a hustle that brings

7:04

in money during your free time

7:06

before work after work and on weekends.

7:09

If you have a hobby that you're passionate about that

7:11

could be a great place to start. Number

7:13

eight, realize this is temporary.

7:17

Will you always need two jobs? Will

7:19

you never ever get to play golf

7:21

again? No. This time of lack or season

7:25

of hustle will last only as long as

7:27

your debts around. Once you're debt

7:29

free you can bring back some of those expenses

7:31

you've always enjoyed. Just be sure it's

7:33

in the budget. Number nine,

7:36

celebrate your wins. Every

7:39

time you pay off a debt be sure

7:41

to celebrate like you just won the lottery.

7:43

You are doing something incredible here. When

7:45

my wife and I paid off my student

7:48

loan and her car loan we popped open

7:50

a nice bottle of champagne and binge watched

7:52

Breaking Bad. Yeah that's how we

7:54

celebrate. After we paid off our

7:57

mortgage we let our kids whack a pinata made

7:59

from our debt. It was epic!

8:02

Find your special way to celebrate and then get

8:04

ready for your next challenge. Be

8:06

careful, you might just start to have

8:08

fun with this crazy personal finance stuff.

8:12

Number 10. Drink the wealth building

8:14

cool aid. Once you

8:16

start clobbering all your debt, you may just realize how

8:18

fun this is. Building wealth, growing your

8:20

net worth, and creating a strong legacy for your

8:22

family may just be one of the best things

8:25

you've ever done. Without any consumer

8:27

debt in your life, what would you be able to

8:29

do? Think bigger. If

8:32

you were financially independent and didn't have to

8:34

worry about your daily expenses anymore, what

8:36

would your life look like? How would

8:39

this change your family tree? How could your

8:41

debt freedom allow you to make a difference

8:43

in your community? When you

8:45

start to answer questions like this for yourself,

8:47

a fire starts to burn inside. Your

8:50

slight motivation begins to turn into a

8:52

passionate desire for change. This

8:54

is when you start to realize how much fun it would

8:56

be to be a master of your money. You

9:03

just listen to the post titled, Climb Out

9:05

of Massive Debt, with these 10

9:07

life-changing steps by Andy

9:10

Hill of marriagekidsandmoney.com, and

9:12

I'll be right back with my commentary. If

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me, the key to getting out of debt

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I discovered the fair movement and started

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devouring blogs about money, I realized

11:29

that I've been brainwashed by consumerism

11:32

my whole life. I

11:34

had to intentionally undo that

11:36

brainwashing by building a desire

11:39

for debt freedom. How did

11:41

I do that? I did a little

11:43

brainwashing of my own by reading about

11:45

personal finance and expanding my view of

11:47

what was possible with my money. And

11:50

when you tune in every day to Optimal

11:52

Finance Daily, you're doing the same thing. I

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heard a powerful quote the other day from

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Emanuel Acho who said, The

12:00

reason why most people fail is that they

12:02

give up what they want most for what

12:05

they want now." Getting

12:08

in touch with what you want most,

12:10

like financial freedom or peace of mind

12:13

or full autonomy over your time, can

12:15

be the weapon you use to fight

12:17

off your consumerist conditioning. I

12:20

completely agree with Andy that analyzing debts

12:22

and creating a budget are super important

12:24

for anyone trying to get out of

12:26

debt. If you're like me

12:28

and got into debt due to mindless

12:30

spending, the cure for that is awareness. Allow

12:33

yourself to really see the full picture of

12:35

your debt and your spending habits, and this

12:37

will enable you to come up with a

12:39

plan to get out of debt. Tracking

12:42

every dollar you spend may sound

12:44

annoying, but it's not nearly as

12:47

annoying as being buried in debt. And

12:50

that's another edition of Optimal Finance Daily in

12:52

the books. Have a great rest

12:54

of your day, and I'll be back tomorrow, where

12:56

your optimal life awaits.