The Simple Path
Are you looking for the simple path to getting out of debt, or are you taking the road less traveled?
Getting out of debt is really simple. It consist of two things. One, spending less than you make and two, saving more than you spend. Their you go the simple route to getting out of debt. Now you know everything to get out of debt.
Right.
Wrong. Though getting out of debt is in theory very simple as I have just explained this doesn’t mean it’s easy. If it were easy everyone would be debt free and I wouldn’t be sitting here giving you get out of debt advice.
So if it’s so simple why is everyone still in debt you might ask? This is a bit more of a complicated question because this all depends on your situation, what kind of resources you have to work with and most importantly how you interpret this information.
Yes you heard me how you interpret my advice to get out of debt. This sounds kind of odd to say but it’s true. I’ll give you an example to demonstrate.
When I was in financial services I went to a lot of meetings. In those meetings we had some of the most successful people in the business giving us lecturs about how to build a successful financial business. Everyone got the same information. In fact everyone was taking notes and listening very intently.
However over a period of a few years some of those people in that meeting became very successful, some were average, and others dropped out of the business completely. Let me remind you again we all heard the same information.
So how is it that it worked for some and not others. The truth is we all interpret information differently. Let me repeat that again WE ALL INTERPRIT INFORMATION DIFFERENTLY.
What one person thinks is relevant information is not to another. It all hits us in different ways. Think of it this way no one person has the same finger print as anyone else. The same holds true with the way we hear and interpret things.
So how does this tie into keeping things simple? Simplicity doesn’t make things easier. Although most people associate those two words as if they are the same when they really aren’t.
Simplicity doesn’t make things easier. Simplicity creates clarity and clarity brightens the path to your end result. In this case it’s getting out of debt.
How To Simplify Your Debt Situation
Here I will show you the steps I used to simplify my debt situation then I will give you an example of my situation and how it worked for me. So here we go.
- Assess The Damage. What are all of the debts that you currently have? List all of them in column format along with amount you owe. Doing this gives you a birds eye view of you situation.
- Combine Debts Were Possible. Combining debts means less payments, which means less to remember and less to do. Their are a lot of ways to do this such as debt consolidation, refinancing, and even doing a 0% balance transfer with your credit cards.
- Automate The Process. Doing things like an ETF ( electronic transfer of funds) can do wonders when your trying to get out of debt and trying to save up money. I use this function wherever possible. On my retirement accounts, emergency fund, even my mortgage. I know this isn’t for everyone but I like the out of site out of mind idea. With this kind of system in place getting out of debt can almost be done automatically.
Can It Really Be That Simple
I recently simplified my debt. In my case I used refinancing as my method of choice. I refinanced my mortgage to simplify my debt situation. So here is what I did.
First, I assessed my situation and put a budget together of all my debt. I then started the process of looking for ways to combine debts together so I wouldn’t have to make several different payments every month.
So I refinanced my mortgage and combined several debts with in it. First, I added two credit card balances, second I added my HELOC (home equity line of credit) into the loan, and finally I added my property taxes, and homeowners insurance into the loan.
In all I combined 6 debts into one payment. In this way I only have to remember one payment now.
So their you have it. Give it a shot and look for ways to simplify your situation like I did. In this way you will be able to clarify the situation and maybe getting out debt won’t look so tough after all.
Keep it Simple,
Chris
This Post was recenty featured on The Carnival of Personal Finance by Stock Trading To Go.
