Published February 11, 2020
The 7 Steps of Becoming Debt-Free
If you want to become debt-free, here are the seven steps you must take.
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Back when I was in college and would walk along campus, I remember coming across those stands that would promise a free t-shirt by signing up for a credit card. I thought this was the coolest thing ever, but unfortunately, I think a lot of people fall into traps like these and inundate themselves with debt.
Being in debt is a stressful situation, so if you find yourself in this position, here are seven steps you need to follow to remedy the situation:
1. Start a baby emergency fund. This will prevent you from being derailed during the next six steps.
2. Use the debt snowball system. This means listing all of your debts, living within your means, and paying those debts off one by one. Start with the smallest first and work your way up once that debt is paid off. Keep applying those same funds to all of your different debts and ‘snowball’ them together.
3. Start saving your emergency fund (three to six months’ worth of expenses). This way, if something major comes up, you don’t have to dig into your 401(k) or other retirement fund.
How cool would it be to pay off your home?
4. Save 15% of your income toward retirement. I have several great books on this topic I’d be happy to refer you to—just reach out and ask!
5. Save for your children’s college fund. Do this after you’ve saved for your retirement, because your child is not a retirement plan. If you don’t have children, skip to the next step.
6. Pay off your residence. How cool would it be to pay off your home? This is a great feeling, and only afterward can your wealth-building really take off, which brings us to the last step.
7. Build wealth and give back. If you have a family member in need, you have the ability to help them once you reach this step.
If you have questions about this or any other real estate topic, don’t hesitate to reach out to me. I’m here to help.
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