Hey, gorgeous Lucky Bee.
Today, we’re talking about how to get out of debt.
If you’re in debt right now and it’s really weighing on you, I have got so much information for you about how you can release it, how you can get a plan and how one day in the future you will be debt free.
It’s totally worth it, so let’s get right into it.
Prefer to listen? Click below.
Lucky Bitch Video Transcript – How to Get Out of Debt
Being in debt is actually pretty socially acceptable.
By the time I was 25, I had quite a few credit cards, I had personal loans, I had overdrafts and I had a mortgage.
I totally understand that feeling of being in debt and feeling like it’s never going to go away.
But it can. If you want it to.
I’m on the other side of it now, I am debt free (except for my mortgage). I don’t have any consumer debt, I don’t have loans.
I want to tell you how amazing that feels. There is a HUGE freedom in it.
There is just a great feeling when you don’t owe anything to anyone; you are under no obligation and you are not trapped to do things just because you have to pay off debt.
It’s totally possible for you too.
We’re going to come up with a really great plan so that you can feel like you’re on track and one day you will be there; you will be debt free.
One of the first things that you can do from a mental mindset point of view is to do a lot of forgiveness.
Forgiveness work on yourself, forgiveness work on your debt and forgiveness work on anyone you feel who has contributed to you being in debt.
Whether you have blame for the government or your university or the bank for lending you the money when you really shouldn’t have borrowed it. Forgive it all. Maybe somebody else has gotten you into debt. Forgive them too.
It’s really (unfortunately) common for women to have gotten into debt to help others. Or maybe you didn’t realize that someone was getting you into debt. Maybe your debt is from a divorce or marriage (what’s known as sexually transmitted debt!)
So, here’s what you have to do first:
1. Forgive, forgive, forgive, forgive & forgive.
Forgiveness for yourself and others.
That will help you get rid of some of the mental and emotional clutter behind your debt. So you can feel like you can actually take action on it and you can do something about it.
When you are carrying a lot of shame, blame, anger, resentment – all of that old crap – it’s very difficult to actually do anything about it because you will continue to feel paralyzed, helpless, angry, etc.
When you get rid of all of that emotional clutter, you will actually have some freedom to come up with some ideas to get past it. That’s my first tip.
2. How much debt have you actually got?
Now, this might seem like a really obvious question for some of you who are really organized, but a couple of years ago when I was in debt, I actually had a vague, but not an exact sense of how much I owed.
I didn’t know what my balance was on any of my credit cards, I didn’t know how much interest I was paying on any of my credit cards and I didn’t even know what my minimum payment was and if I was even paying the minimum payment.
Knowledge is power here and it can be really powerful for you to know.
If you’re afraid of even looking, that’s obviously going to be a problem because it could be getting worse.
I actually found out that my payment was going a couple of days late, so every single month I was paying late fees, not because I didn’t have the money, just because I had the direct debit set up on the wrong date.
Maybe your minimum payment is just a little bit late and so you’re getting fees. Again, knowledge is power.
If you put together a very simple spreadsheet you’ll see quickly when your payments are due and how much debt you have. (I’m totally happy to share this spreadsheet I used by the way: Grab my debt spreadsheet here.)
My spreadsheet is very, very simple. I just put down who I owed what to, — what institution I owed the money to — what the current balance was, how much I was paying each month and what the interest rate was. I used that spreadsheet every single week because I wanted to update if I’d made extra payment (and that was super motivating by the way). It really does give you knowledge and power. The first time you see it, you might want to vomit because you think it’s better to not know than to face it, but it’s not. As soon as you face that dragon, you’re going to feel so much better and then you can actually do something about it. Grab my debt spreadsheet here.
3. Come up with a plan.
I personally love the snowball method for paying off debt. It’s a very, very simple method and it works. Basically, you come up with a plan of which debt you’re going to pay off first.
Some people pay off the smallest sized debt, some people pay off the highest interest rate debt first. Whatever it is, it’s totally fine. Both of them work.
I really like paying off the smallest debt first because it was really motivating to cut up a card and to go,
“See you later! See you later, bitches!”
Someone asked, “Should you keep the cards open?” I will link to some resources below on this, but I’ve got thoughts. Denise has got thoughts on this. Of course she does.
My opinion: If you know you’re going to max the credit card out again, cut it up. It’s not worth it.
Different people say different things about having an open credit card balance that you’re not using. In some countries that can go against your credit rating and in some that can improve your credit rating.
So, this is not financial advice. This is mindset advice…
I always ask myself…
“Who will benefit from you having a lot of available credit?”
It’s usually in the bank’s interest because most people haven’t changed their behavior to keep from using it and getting more in debt. Some people might want to keep it for emergencies.
But I think it’s also human nature that if you’ve been in debt before, you might be tempted to get into more debt.
It’s totally up to you whether you completely cut them up or not. I personally cut up some of the them (the really high interest ones) and consolidated a few, so I wasn’t tempted to think of my available credit as “spendable cash”.
Here’s the next step:
4. Make it automatic and don’t stress too much.
Make sure you know when all your payments are going out, and when, and decide which debt you’re snowballing first.
Nothing fancy, just simple decisions. Plus, you’ll stop wasting unnecessary money through stupid late fees or paying unnecessary interest.
Now, here’s the fun part.
Find ways to pay it off quicker by increasing your minimum payment or reducing your interest.
Here’s a simple script for negotiating your interest rate. Sometimes you just need to ask and it could pay it off so much quicker.
And then decide that you’ll find extra money to pay off towards your debt.
For example, when I got a new client or a small windfall, I’d get excited about putting some off my debt (so I could update my spreadsheet!).
I wouldn’t pay off all of it because I didn’t want to feel deprived.
Agree a percentage, for example 10% that will be put towards your debt. Get an extra client for $100? Ten bucks goes towards your debt (on top of the minimum payment). You might think it doesn’t make a huge difference but it does.
That can be really motivating when you update your spreadsheet and go, “Oh, my God. It went down again. This is so exciting. We’re one step closer to debt free!”
It doesn’t have to be about deprivation…
From a mindset point of view, don’t feel like you have to stop living your life just because you’re in debt.
Some people are in denial and continue to spend and get in more and more debt.
But other people live like they’re in debtors’ prison. Like, “I can’t do anything. I’m not allowed to do anything” and they feel constantly guilty.
For women, that doesn’t just translate to “I won’t spend any money.”
That usually becomes…
“I’m a terrible person.
I don’t deserve nice things.
I don’t deserve to do good things.
I don’t deserve to create success in my life.”
You can still create a lot of success, even when you’re paying off debt.
For a temporary period, you can decide to do things that don’t cost you a lot of money, but still make you feel really great.
Go and use all your best perfume, wear your best outfits and use your best sheets. Really start to create that First Class life for yourself, even if you’re not spending a ton of money.
You can re-frame things.
When we were in debt, we’d say “We can go out tonight OR we can stay in and watch Netflix.”
Then the money that we would have spent on dinner, let’s put that off our credit card!
Yay! High five!”
We got excited about getting out of debt, and it didn’t feel like we were in hardship we were making a conscious choice. A temporary sacrifice for the freedom of being debt free (and my god, it’s worth it).
You can re-frame anything, but the important thing is that you can live an amazing life NOW and still choose to pay off debt.
Don’t wait until you’re out of debt to treat yourself like a First Class person or allow yourself pleasure.
Living a Lucky Bitch life is to be living a debt free life.
Living your life where you don’t feel like you’re obligated and trapped by your debt.
Here’s the simple spreadsheet that I used to pay off my debt (around $50,000 in about 4 years). Grab my debt spreadsheet here.
It was so motivating and it happened much quicker than I ever expected it was going to. You can do that too.
Here’s to you, Lucky Bitch, for getting out of debt. I know you can do it!
Did you miss last weeks video? Check it out here: How Self-Love And Acceptance Improves Your Income