Creating a Plan for Getting Out of Debt

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When creating a plan for getting out of debt, cut spending, increase income if possible, and start by paying off either the smallest amount or the highest interest rate. Slowly chip away at debt, avoiding further debt in the process, with advice from a licensed financial planner in this free video on personal finance.

Part of the Video Series: Debt & Debt Consolidation
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Video Transcript

Hi, my name is Bill Rae, I'm with HBW of Florida. I've been in the finance field for well over 20 years and have helped many people and businesses in their financial situations. The question we're going to talk about today is how to create a plan to get out of personal debt. Let me start by warning you, there are many, many scams out on the market today. Be very careful, there is no magic pill, there's no white knight coming to save and as far as I can tell, there's no programs out there that are going to give you the money to get out of debt without you making commitments and interest to pay them back. So with that in mind, let's understand that it took you a while to get into debt and it's going to take you a while to get out. But that's OK. Stand firm. It's very simple, first of all you need to understand that there's only two things you can do right off the bat. One is you need to cut spending. I know that doesn't sound nice but that's reality. And number two, you need to increase your income if at all possible. After that, all you simply need to do is start with just a regular pad, write down everybody you owe, what your monthly obligations are and what the interest rate is on those loans. My suggestion then is either start with the smallest one if you want to feel good or the highest interest rate. Continue to make payments to everyone. Talk to the people you owe money to. You'd be surprised how many of them are willing to work with you right now. But, a plan can be as simple as starting with let's add 10% to what you should be paying on your highest interest and when that's paid off, take all that money including that 10% and go to the next and continue to do so till you're debt free. But do keep this in mind, if you start this plan, it's going to be tough at first then it will get better. My name is Bill Rae, I'm with HBW and I'm helping you build true wealth.

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