One of the more common answers I got from my blog post as to what stops people from getting out of the rat race and into the fast track is BIG DEBT.
I call it the BIG Debt Trap. Maybe you got into BIG debt by buying what Robert Kiyosaki calls "Doodads" by using credit cards and the interest you're paying becomes overwhelming. It becomes a trap you seem to never get out of because the interest payments are so big that you can't even afford that (never mind the principal). Or maybe you got into BIG debt because you've made an investment that turned out to be a mistake and worse, you had to borrow the money to make the investment. I've made both mistakes by the way - and some of these mistakes are so big I am still paying for them today.
How does one get out of the BIG Debt Trap?
It's not easy but it's doable. The following are some of the things you can do if you are trapped with BIG debt.
1. Stop borrowing. Cut up all your credit cards except one (and you can use this ONLY for emergencies like life and death situations...a 50% sale at your favorite department store is NOT an emergency).
2. Simplify your life. Understand the difference between your needs and your wants. You need to drink. You want to drink a 50 year old wine that costs $150 a bottle but you don't need it. Drink water instead...it's healthier too.
3. Sell all the doodads you don't need. I bet 80% of these stuff you bought are things you probably don't need or use anyway. Raise some cash and use the cash to pay off those debts.
4. Renegotiate your debt and find out how you can pay them at a discount. Use the BONUS you get from your job to pay off your credit card balance at a discount. You'll never know - they might accept the lower amount as payment in full. Let's say you owe P80,000 on a credit card and let's say you got a P40,000 BONUS. You can tell the credit card company the following: "I know my balance is P80,000 and I am having a hard time paying it. Fortunately, I got P40,000 cash now and if you consider P40K as payment in full of my P80K credit card - half of which really is interest payment...I can give you the cash now. If you don't agree to this, I can pay off my other credit cards instead."
The truth is, banks are in the business of making money on your money by lending it. Because of this, banks and credit card companies are sometimes willing to get their money now, even at a discount so they can lend more money.
5. Set up an automatic debt repayment program. Automatically deduct the payment for each credit card/ lender out of your checking account. I suggest you focus on paying off the debt that consumes the highest monthly payment with respect to the outstanding balance FIRST while paying the minimum payments on the other credit cards. By doing this, you will pay off your credit cards very fast. You will pay them off a lot quicker than you think. I can show more details in my upcoming e-Book "Cashflow 101 Cheatsheet". If you're interested to download that e-Book for free, visit my website - http://buyfirstdeal.com (it will be there soon).
6. EXPAND your means. One advantage of having BIG debt is it forces you to generate new streams of income. Think of Donald Trump. Back in the early 90s when he got into financial trouble, he was at one point NEGATIVE $900 million in the hole. He was poorer than a beggar because he owes $900 Million more personally than all the assets he own.
He did steps 1 to 5 above and more importantly, he EXPANDED his means. He did more deals, even BIGGER real estate deals precisely because he had no choice but to succeed. You might be thinking, "But Trace I am NOT be Donald Trump!"... so let me give you a more mundane example.
Let me tell you the story of one of my students: Alma Santos. She was working for a big multinational company and it paid her very well. She was making over $70,000 a year but she was not happy working there. She knew she was capable of much, much more in terms of the contribution she could be making to the world and the amount of money she could be making. Also, like a lot of people in California, her house is no longer worth what she owes on it. She was suffering from BIG debt as well.
I introduced her to real estate investing and subsequently, to a direct sales opportunity that I just started with a multi-millionaire whom I got as my mentor. She found herself gravitating towards this direct sales opportunity. She loves it because she is helping people improve their health and their incomes as well. She became so successful at this she left her high paying job and she is now on her way to becoming even more successful than I am at this direct sales opportunity. She is now opening a branch in Bermuda and she opened a branch in the Philippines too. Oh and by the way, she left her job just 3 months after I introduced her to this direct sales opportunity.
Alma and my direct sales multi-millionaire mentor (he makes six figures IN DOLLAR TERMS every single month) are doing an event this coming Saturday in California. In this event, my mentor is going to show people how they can achieve health and financial freedom, just like Alma in a relatively short span of time. The bad news is this event is not free. The ticket costs $159. The good news is I BOUGHT 7 tickets to giveaway to 7 of you who are reading this blog. To get the ticket, you need to call Alma at 1-714-488-1081 or you can email her at amend0205@gmail.com. This is first, first served so you better call her NOW before all the 7 tickets are gone.
dedicated to your success,
Trace
P.S. You missed the Cashflow 101 LIVE boardgame last Saturday? Don't worry. You have 2 more chances of winning the Cashflow 101 Boardgame. Watch the video below:
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