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Module 4: Debt LessonPart 2
Module 4: Debt LessonPart 2
Getting Rid of Your Debt Forever
The Lesson Blueprint
✓Where do I Start First?
✓What Tools Can I Use?
✓Rookie Mistakes
Where Do I Start?
✓Debt Snowball
Debt Snowball
✓Lists Your Debts From Smallest to Largest (Not the Mortgage)
✓Ignore the Interest Rates!
✓Minimum Payments on Everything
✓ATTACK the First Debt!
✓ List them all out on
this form
✓ Min Payment Due to
Keep Current
✓ Attack Top One
✓ Roll that into Next
One
✓ Roll that into the 3rd
one
✓ Keep going…..
Debt Snowball
Why Does it Work?
✓You will Start Knocking Out Debts Early On
✓Behavior Change
✓ It is Step-by-Step
Debt Snowball
Why Does it Work?
✓ It is Visual
✓ It is Really a Goal Sheet
Debt Snowball✓Exceptions to the Debt Snowball
✓Student Loans in Deferment
✓ If you owe the IRS
✓ If you have a loan against your retirement account
But I Don’t Have The Money
What Should I Do?
Credit Card Debt✓ UNSECURED Debt
✓ If you Don’t Have the Money, then you Don’t Have the Money
✓ If it goes into Collections, it goes into collections
✓ Your Family Eats BEFORE Visa gets paid
✓ They took a Risk too!
Auto Debt
✓New Cars lose 60% - 70% in the first 4 years!
✓Should I Sell the Car?
✓2 Year or Less Rule
Auto Debt
✓Upside Down in the Loan?
✓What if Have a Car Lease?
✓ Call the Leasing Company & Ask for the Payoff or Buyoff
amount
Auto Debt
“I cannot make the payment, what should I do?”
✓See what the car is worth and sell it Private Party
✓You will probably need a small loan to cover the
difference
Auto Debt
“I cannot make the payment, what should I do?”
✓ Avoid a Repo at all costs!
✓ They will sell your car quick (cheap) and sue you for the
difference
Going from $31,000 Loan to a Paid For Car in 12 Months
✓ You owe $31k on a Truck at $482 for the next 66 months
✓ The Truck is worth $28k
✓Get a Smaller Loan for $6k
✓ Sell Your $28k Truck and Buy a $3k Used Car
Going from $31,000 Loan to Paid For Car in 12 Months
What Happened?
✓ You just went from a $31k Debt to a $6k Debt
✓ Average Car Payment in America: $482
✓ ~12 Months
The $3,000 Beater!
Credit Report Inaccuracies
1977 Federal Fair Debt Collections Practices Act
states:
All Credit Bureaus are Required to Remove all Credit
Report Inaccuracies within 30 days of you notifying
them
Credit Report Inaccuracies
✓ If they can’t get it done in 30 days or they ignore
you, the item MUST be removed from your report.
It’s Law.
✓Always Create a Paper Trail (Letter or Email)
Collection jerks People
✓They want to create an emotional response to get
you to pay them
✓They will Lie, Lie, and Lie again to get you to Pay
Collection jerks People
✓ They don’t want to help you
✓Their job is to Harass You
✓Not all Collectors are Jerks (just most of them)
Collection jerks People
✓ Your rights under the Federal Fair Debt Collections
Practices Act of 1977
✓ They can only call you between 8:00am – 9:00pm YOUR
LOCAL TIME
✓ Collectors Cannot Call you at Work
http://www.consumer.ftc.gov/articles/0149-debt-collection
Collection jerks People
✓ They cannot garnish wages without a lengthy court
process
✓ Every collector must send you a written “validation
notice” telling you how much money you owe within five
days after they first contact you
http://www.consumer.ftc.gov/articles/0149-debt-collection
Debt Morals
If You Signed for the Debt, You Have a Legal &
Moral Obligation to Pay it Back
You Still Come First
Action Steps1. Pull Your Credit Reporthttp://www.annualcreditreport.com
Experian, TransUnion, Equifax
2. Debt Snowball
3. Insert into Your Budget
4. Attack, Attack, Attack!
Rookie Mistakes
✓ You STILL use the Math
✓ You Make Yourself the Exception
✓ You Do Nothing and Expect Change
It’s Up To You!
✓ What Does Your Life Look Like Debt Free?
✓ How Much Longer Can You Go On Like This?
✓ Will You Change Your BEHAVIOR?
✓ There Isn’t Another Option
Wrapping Up
✓ The DEBT SNOWBALL Works Every time
✓ Knowing Your Rights
✓ If you have the money – Pay it
✓ Get it out of your life Now & Forever
In the Next Module…
What Insurance You Need?
Why You Need It?
The Break Down of Each?
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