Paying off debt and building a future you can live off of is the primary focus of this blog. We are not talking about merely surviving in our golden years, but actually thriving! Unfortunately, the world is not geared towards helping you thrive in retirement.
Corporations employ marketing strategies and spend billions of dollars trying to figure out how to make you part with your money and buy their products. It is the survival of the fittest – and the more clever one ends up with the money.
As Thomas Tusser once said, “A fool and his money are soon parted.” My friends, it’s time to stop being the fool and to start taking control of our future. If you’re reading this, that day is today! Welcome to your new life!
The Debt Payoff Playbook is a layout of a few easy steps to make sense of the mess you are in. The general idea is to get rid of your debt and start building your wealth. Easier said than done right? As we start this journey, realize there will be ups and downs – but I am confident you will come out successful if you keep moving forward!
The Debt Payoff Playbook is laid out in 8 simple phases – because complexity only causes confusion. Follow these steps in order and you will soon find yourself in the place you deserve to be, debt free and building wealth!
Without further ado, let’s get your life back on track!
Phase 1 – Build A Budget For Financial Success
(Get your free budget printables here!)
I’m willing to bet you don’t have a budget if you are in this mess – and if you do, you certainly are not following it. The word “budget” was previously a curse word in my family, but over time we have come to embrace it. It turns out, you can still live on a budget! For a more detailed explanation of how to build a budget, please refer to my related article: Budget Isn’t A Bad Word.
Phase 2 – Save $1,500 – $2,000 For Emergencies
Let’s face it, life has a mean way of kicking us when we are down. By setting up a budget and setting up your emergency savings, you can kick life back when it tries to bully you. This emergency saving will protect you from many of life’s unforeseen financial struggles.
Medical bills tend to be high on the list of debt – and with the average cost of an emergency room visit being $1,233.00¹, this emergency savings may be just what you need to keep you from putting more debt on your credit cards. In order to speed up the emergency savings process, make minimum payments on everything until you get this funded.
Reviews.com recently published a guide to help lower barriers to building your emergency fund by offering creative tips to help you save, discussing realistic events to plan for, and reviewing multiple emergency fund do’s and don’ts. You can find their guide here.
If you need extra help with more income, check out: 6 Reasons Why You Need A Side Hustle&19 Ideas To Make Extra Money
Phase 3 – Attack Your Debt!
It’s time to stop fooling around. These credit cards, student loans, medical bills, car payments **insert other debts here** have been around for far too long. They are controlling your life and it is not fun anymore. This is where you bear down and take your life back – by destroying one debt at a time.
There are different theories for which debt you should tackle first and for more on this visit my related article: Simple Steps To Start Your Debt Free Life!
- Debt Snowball Or Debt Avalanche? Which Is Better?
Phase 4 – Cash Reserves For 6 Months
You’re debt free!!! Finally!! Now, what will you do if you lose your job tomorrow? Will you be thrown right back into drowning debt like you were before? Let’s set ourselves up for success rather than failure. By quickly saving up 6 months of living expenses – just the bare minimums needed to live each month – we can account for some of life’s worst-case financial scenarios.
Phase 5 – 18% Of Your Income Into Retirement
Experts have differing opinions on this “magical number”. Some say 15% while others say 20%. 18% has worked well for me and will set me up very nicely in retirement – I recommend you do the same. If you can afford more, then put away as much as you can while still enjoying life in the process. A great starting point is an employer-sponsored 401k or 457b.
Phase 6 – Save/Invest For Future Specific Plans
Do you have children who would like to go to college someday? Do you have elderly parents who may not be able to survive off social security alone? Planning to adopt a child? This phase is for identifying future financial needs that need to be planned for ahead of time. Get the kids’ college fund started or start saving for those other big-ticket items now so you don’t regret it in the future.
Phase 7 – Get Rid Of That Mortgage
How would it feel to have no house payment? This is the time to annihilate that mortgage! Use the same motivation you had when paying off your debt to rid yourself of that pesky monthly mortgage payment. If you’re wondering if you need a mortgage for a tax write off, please refer to my related article: The Home Mortgage Loan Lie.
Phase 8 – Invest For Success
You have no debt, no mortgage, you’re saving up for future expenses and have plenty of money left over. What do you do now? Other than celebrate and enjoy it, let’s move that extra money into additional investment vehicles such as a Roth IRA. This is where you move ahead of the curve and set yourself up financially to leave a substantial inheritance to your heirs or be a huge financial blessing to those charities you believe in.
- What Should I Do With $10,000?[Answered]
When you complete these phases – (Trust me, it’s possible!), I would love to celebrate with you! A small fraction of people live this way – financially responsible – and I know you are tired of living like everyone else. You work too hard to be this broke my friends, it’s time to destroy the status quo and change your future! If you still need your free budget printables, get them here!
What step are you currently on? Let me know, I would love to encourage you!! Comment below, I am curious to see where you all are starting your journeys. Also, please share this post across social media if you found it beneficial and sign up for email updates in the box below. Thank you for reading and please reach out if you have any questions!
-Ryan
