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Create a Get Out and Stay Out of Debt Plan | USAA Member Community

 

 

Being in debt feels awful – period and end of story. You feel out of control and you feel an incredible aching weight on your shoulders as you try and work a solution to the mounting financial debt. The only good news is that everyday people get out of debt and stay out of debt – you can do this too! 

 

Get Out of Debt Step #1 – Get The Whole Family Involved In The Solution. Often times, it is the combined spending of kids and parents that helps move a family into debt with cell phones, cell phone plans, clothes, and eating out frequently to name only a few of the common reasons that drive up spending. The same people that were responsible for the debt are also responsible for getting the family out of debt and meeting the new financial plan. Several family meetings will be required to explain why the family is in the situation and how the debt will be eliminated. 

 

Get Out of Debt Step #2 – Forgive Yourself & Accept Financial Mistakes Were Made. This is one of the most vital steps in getting out of debt. If you cannot forgive yourself, and more than likely your spouse, the reasons why you got into debt in the first place, then your get out of debt plan will not work. You need to accept and forgive that financial mistakes were made and deeply understand your current financial situation. Once you have accepted and forgiven yourself for the financial mistakes, you have a clean slate to move forward.

 

Get Out of Debt Step #3 – Determine How The Debt Happened & Stop It. Often times, the spending on extraordinary financial items such as cars, clothes, and incredible houses are the main culprits of a debt situation. Do everything you can immediately to stop these enormous debt creators. Stop buying expensive clothes, stop buying furniture, and stop buying anything not essential. Stopping the debt so you can start to pay it back is essential.

 

Get Out of Debt Step #4 – Create a Fixed Pay Back Period with a Budget. After you have stopped the debt, it is time to create a fixed payback time period and a realistic budget. See if you can pay off all your debt in 18 to 36 months. This seems like an incredible short period of time but the brevity of the period combined with incredible discipline to a budget will make it possible. The basic process is that you have to add up all your debt plus the projected interest and divide by 18 months or 36 months and that becomes your monthly debt payment. Then, you have to create and abide by a strict family budget to create the monthly payments.

 

Get Out of Debt Step #5 – Create Extra Income To Pay Off The Debt. Downsizing to a less expensive car, selling unneeded items, and taking odd jobs are all ways to create income and apply that income to pay down the debt faster. This is where having the entire family as a force to enable faster debt pay off really comes in handy. Finding unneeded items to sell will help significantly to pay the debt off faster.

 

Getting Out Of Debt Is Never Easy, But It Can Be Done. Involving the entire family is critical and it can serve to bring a family closer together as opposed to bring it apart. A morning shoveling snow or raking leaves as a family will make extra money for debt and make you even more proud as a family. The critical parts of debt reduction are forgiving yourself, stopping the debt, maintaining a strict budget so you pay off debt quickly, and creating extra income to pay the debt down. Now, smile, grit your teeth, and pay off debt.

 

USAA Resources To Assist In Budget Creation and Debt Reduction:

 

(1) USAA Financial Q&A On Debt Management - https://communities.usaa.com/t5/Financial-Advice-Q-A/qa-p/ask-usaa-qa/label-name/Debt%20Management


(2) USAA Financial Readiness Score - https://www.usaa.com/inet/wc/financial_readiness_score_landing


Have something to add to this article? Share your insights in the comments below.

 

About the blogger:
Chad is the author of two books: (1) Combat Leader to Corporate Leader and (2) Battlefield to Business Success. Chad’s brand message is that organizations & individuals need to translate and apply military skills to business because they immediately produce results and are cost effective. Chad is a retired US Army Special Forces Lieutenant Colonel with 20+ years of Active and Reserve service in infantry, Special Forces, and joint headquarters units. He served in Iraq, Bosnia, Korea, and throughout the United States. He was awarded the Bronze Star, the Combat Infantryman Badge, the Meritorious Service Medal, the Special Forces Tab, and the Ranger Tab.  Chad is an adjunct Lecturer of Marketing at Creighton University in Omaha, NE. In addition to teaching, he is a mid-level marketing executive and has worked in marketing and sales roles for various companies, including General Electric, Comcast, and Manugistics. He has been published in over 110 different articles in over 85 separate publications including The Harvard Business Review blog, Business Week Online, Forbes, Christian Science Monitor, and USA Today. He has a BA from Northwestern University and an MBA from Georgetown University.

 

 


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