Module 4: Debt Lesson Part 2

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2 Module 4: Debt Lesson Part 2

3 Module 4: Debt Lesson Part 2 Getting Rid of Your Debt Forever

4 The Lesson Blueprint Where do I Start First? What Tools Can I Use? Rookie Mistakes

5 Where Do I Start? Debt Snowball

6 Debt Snowball Lists Your Debts From Smallest to Largest (Not the Mortgage) Ignore the Interest Rates! Minimum Payments on Everything ATTACK the First Debt!

7 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 3 rd one Keep going..

8 Debt Snowball Why Does it Work? You will Start Knocking Out Debts Early On Behavior Change It is Step-by-Step

9 Debt Snowball Why Does it Work? It is Visual It is Really a Goal Sheet

10 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

11 But I Don t Have The Money What Should I Do?

12 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!

13 Auto Debt New Cars lose 60% - 70% in the first 4 years! Should I Sell the Car? 2 Year or Less Rule

14 Auto Debt Upside Down in the Loan? What if Have a Car Lease? Call the Leasing Company & Ask for the Payoff or Buyoff amount

15 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

16 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

17 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

18 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

19 The $3,000 Beater!

20 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

21 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 )

22 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

23 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)

24 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

25 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

26 Debt Morals If You Signed for the Debt, You Have a Legal & Moral Obligation to Pay it Back You Still Come First

27 Action Steps 1. Pull Your Credit Report Experian, TransUnion, Equifax 2. Debt Snowball 3. Insert into Your Budget 4. Attack, Attack, Attack!

28 Rookie Mistakes You STILL use the Math You Make Yourself the Exception You Do Nothing and Expect Change

29 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

30 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

31 In the Next Module What Insurance You Need? Why You Need It? The Break Down of Each?

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