I am going to share some steps on how to get out of debt, so you can stop worrying and do something awesome with your life!
But before we get there, let me point out that I’m not a financial advisor. So what I’m going to share is based on my personal experience with debt and also, acquiring FU money. Maybe some of my stuff will work in your life, or maybe not…
With that said, one of my life goals is to buy a fully restored Austin Healey 3000.
Take a look at the pic below. Pretty awesome, right?
My dad owned an Austin Healey 3000 back in the 60’s. But then he sold it, went to Viet Nam, survived, came back to the states and hasn’t rode around in one of these since…
Eventually I’d like to change that.
But the only way I can change that is by growing my business and avoiding debt like the plague. You see, there are a lot of people who will say stuff like: “You’re doing well. Just get a car loan. Get that car today. You deserve to treat yourself.” And while the temptation to go into debt is ever present, there is nothing that will kill your dreams faster.
When I graduated college, I had a student loan bill that sucked. At the time, I didn’t have money or a job. So I decided to pay for stuff with credit cards. That was a bad move. It only took eight months (after college) until I added just enough credit card debt on top of my student loans to hit roughly 30K! That was a really sucky time.
I needed to get out of debt. But I did not know how…
1. Pay Yourself First
Fortunately I came into contact with two successful business owners in my hometown. Both thought differently than I did. For example, one guy owned a bunch of car dealerships and was worth 67 million dollars (not a typo.) Another guy owned a chain of bowling alleys. Having conversations with these guys taught me I was thinking about money all wrong.
Those guys inspired me. After meeting, I decided to learn everything I could about how money works. In the process, I discovered a concept called: “pay yourself first.” And the idea is simple. Whenever you get a paycheck, before you pay any bills or fill up your gas tank, set a little money aside and NEVER touch it. That’s all you gotta do.
One guy I discovered during this time was Brian Tracy. He’s been a HUGE influence in my life. And I now introduce him to you. Watch this video:
If you’re like most people, you probably want to save money but feel too strapped to take action. This is because each month is filled with bills and other unexpected expenses. For this reason, most people put off saving until the end of the month.
Paying yourself LAST never works.
Again, I’m speaking from experience. It was really tough to break my habits. Because I didn’t have money, I spent whatever I had, thinking I’d save later. But at the end of every month, there was nothing left to save. In other words, there was more month than money… And that was a vicious cycle.
2. Get Out of Debt
Something had to change. So I decided it make it my sole obsession to get out of debt. To get ahead, I had to make some changes. Instead of waiting around for my dream job, I took a job selling washing machines. Then I cut up my credit cards. I lived below my means and followed these steps:
- Write down all monthly income, including paycheck, extra jobs, etc.
- Write down all monthly expenses, including bills, groceries, gas, etc.
- Subtract expenses from income. What do you have left?
- Open a high-interest online savings account.
- Set up automatic withdraws each payday and pretend it is a bill.
In a few months, I had small emergency fund. Then after a year or so, I paid off my credit card debt. Then after a few more years, I paid off my student loans. After that, I spoke to a financial adviser and started investing.
And all this brings me to my final point…
3. Accumulate FU Money
Once you become debt free and get money in the bank, you will grow in ways you cannot yet imagine. It is at this point (and you’ll know it when you get there), that you need to accumulate FU Money.
You know you have “FU money” when your bank account it so robust, you can walk out of any meeting without the fear of starvation. For example, lets say you get into a negotiation for something you want… But you don’t like the terms, and the other party isn’t willing to make any concessions. Then you can say: “FU, I’m done!”
Or maybe you’re a few weeks into a new job you find out your boss is a complete idiot and makes stupid decisions that negatively impact you. Wouldn’t it be great if you could just walk away? “FU, I quit!”
FU money gives you freedom to live the life you want to live, without worry. You sleep better. And ironically, FU money will give you just enough self confidence and power, that (if you still have a job) you’ll probably get a promotion.
It’s Not Easy, But Worth It
None of what I described was easy for me. I learned you’ll only get out of debt and accumulate FU money if you develop the life-long habit of paying your first. If this is interesting to you, there are many financial apps and software to help you stay on top of your financial game. Check out Mint and Acorns. And make sure you download my guide too.