Destroy Your Debt

How to be Lazy and Pay Off Your Debt

pay off your debt

Most Americans have debt, and it haunts them people for years. That’s because 29% of people only make the monthly minimum payment on debt with super high-interest rates.

Just like tackling any other goal, you need the plan to pay off your debt fast. Today the guy is giving you the easiest debt reduction plan, so there are no more excuses.

It does require a little work on your part, but once you get the wheels turning you will have yourself an automated debt reduction system. If you want to go a little deeper, check out our free book, The 10 Day Debt Reduction Plan.

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Get Your Debt Bill Lowered

If you are making minimum payments monthly on your high-interest debts it probably seems like your not even putting a dent in total balance. Companies like National Debt Relief can significantly reduce your existing burden your debts.

They specialize in reducing the balances on credit card debts, medical bills, and other unsecured debts. They may be able to reduce some of your debt and help you consolidate if necessary. If you don’t even know where to start it can’t hurt to talk to someone for free to see what kind of debt reduction solution you need for your situation.

Face the Music

Take an inventory of your debt. Make a list of all your credit cards/loans, the amount you owe and the interest rate. You should have done this after as part of your action plan from the first episode of the month.

Pro Tip: Create a free account on either CreditKarma or Credit.com will tell you all your debts for you. You can also grab it from your Mint.com account.

Now that you have a list of your debts sort your list by your highest rate debts on top with your lowest at the bottom. Resolve to escape debt using math and tenacity, not emotion. Paying off the highest interest rate debts first is called the Stacking Method.

Compared to the Snowball Method where you pay off the lowest balance first, staking will save you more money in the end. You can try a debt calculator like Undebt.it. Stay motivated by tracking your progress.

Now that we have a debt list there are two things you need to do. First, determine after all expenses how much you save every month. If that number is less than 15% than try to do what you can to get it there. For Example, if you make $3,000/month you should be left with $450.

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Rules for a Refinance

Determine what debt needs to be moved to a lower interest rate through a refinance or consolidation. Go to some loan consolidation companies like Lending Club or refinance companies like Earnest and see what rates you can get.

Later in this month, we’ll be providing a ton of details on which company you should go to for what debt based on your situation. There are a ton of companies! These lower interest rates do come with a price tag. Be aware of loan origination fees and do your math to make sure the fee is worth the savings.

For Credit Cards, you will consolidate everything; it’s highly unlikely your credit card is giving you the best deal on your debt. Consolidation companies will take all of you debts on all your cards and combine it into one debt and give you a better interest rate.

For all other loans, you’ll only really look to refinance debt with a rate approximately 1% or higher than the rates you see on the various refinance sites. Again, the company grid is coming next episode!

Use this circa 1995 refinance calculator, determine how much if any you will save. Try to refinance and consolidate everything at a better rate.

Destroy Your Debt

Now that you did your research on difference refinance companies and their rates, it’s time to create an action list.

Take the list you make of all your debts of all your debts and  Put an “R” next to each debt on your list you will able to refinance to a lower rate and a “C” next to each one you can consolidate. One by one go through your list and get those rates lowered!

This process may take some time so while you are sorting it all out make minimum monthly payments towards all debts except for the highest interest debt on your list. This gets the full remainder of your monthly savings because it costs you most to have it.

To quote the always-awesome Adam Carroll

Evenly paying all of your debt is like trying to toast bread with a flashlight.

You won’t make meaningful progress unless you focus fire on the most expensive debt.

Moving your expensive debt into cheaper debt frees up more money every month. You can use this money to pay down your principle instead of just covering interest. Hook all your credit into Debitize so that you no longer take on debt beyond what you can afford.

Pro Tips to Accelerate the Process

Stop frivolous spending and cancel subscriptions like cable. Funnel those savings towards your debt. If your debt payment is rough $450/month like in our example, you can decrease the time it will take you to escape debt by over 20% if you’re paying $100/month for cable.

Eat at your parent’s house once per week. They’ll love to have you; there will probably be leftovers you can take home, and you’ll cut the dinners you have to buy groceries for or order in by about 15%.

Sell everything that you don’t need. Chances are you’re a terrible hoarder. Sell clothes on places like PoshMark random things on Ebay/Amazon/Facebook. Every dollar counts. I’m willing to bet that with 5 hours of effort or less everyone listening can earn at least $300 selling stupid shit you own.

Save any dollar you can. Any money you put towards debt now is also money saved on the interest you won’t pay having your debt around longer.

Andrew also suggests buying penis shaped tomatoes…….. I’ll have to talk to him about that.

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