By : Austin Netzley

http://www.businessinsider.com/the-steps-i-used-to-pay-off-81000-of-debt-2014-12?IR=T&

Step 1: Make the decision.

This sounds like a simple first step, because we all say that we really want to be debt-free, but our actions don't follow our words. When you truly make the decision, it becomes real. You fully commit and develop a belief that ensures that it is not a matter of if you will achieve your goals; it is only a matter of when.

I was sick of being and, more importantly, feeling broke. I was sick of worrying about money every single day. So, well before graduation, I made the decision that some way, somehow, I was soon going to be rich.



TEH : I was un-aware about financial, and got myself in huge debt after married(weddings, shifting and kids). Credit-cards, personal-loans ... and from mom/aunts. I was very embarrassed of my in-capabilities of getting out of debt ... and it was piling-up. I was drown. That was 8 years ago ... when I had my first boy.

Looking back, I have to thank to many good books. I wish to list them out here(may be later). I have diligently reading those financial-related books, rather than Math books!! I shifted to read Personal Money magz  rather than Roda-roda. You see ... that shift of MINDSET is the first step I took ... to get out of debt.

Make that crucial decision and work that way. That is the first STEP. If you are in debt(there are good and bad debt, actually) ... THINK of 2015 as the beginning of the year ... to START to get out of debt.

DO YOU WANT to get out of debt?

Do something about it. Change that MINDSET of yours. WORK ON THAT.

Step 2: Stop getting into additional debt.

As my friends in other similar jobs were buying brand new sports cars, I stuck to my used 2002 Honda and kept my expenses to a minimum.

The biggest challenge that people have is getting out of the vicious debt cycle that becomes harder and harder to escape. Sticking to this step is absolutely critical.

TEH : Yes ... this is VERY crucial ... be frugal ... check out expenses. Make sure we REDUCE our expenses ... and be VERY discipline. I could type these ... as I was in that position. Huge debt, paying minimal to the credit-card ... living in tight situation and have to consider every dollar I was using. But ... it pays off to be frugal.

Buying into those latest gadgets or dining in those so-called "IN" restaurants ... with debt piling up is simply financial suicidal. Slowly pay our debt and never add in new ones!! Easier said than done, of coz!!

Step 3: Define the situation.

You can't fix what you don't know, so I had to get very clear on all of my loan details, including all of the debt balances, lender information, interest rates, and the required monthly payment amounts and start dates.

The best ways to find all of this information are via your loan statements and also a credit report. When I ran my first credit report, I found two additional accounts that I thought were closed that were not, so it's important to do on an annual basis. I put all of my loan information on a spreadsheet that I regularly updated, and that allowed me to get a clear picture of what I owed and how to attack it.

TEH : Correct ... I was so ignorant and knew nothing much about the interest rates etc etc. Credit-cards charging us the highest around(legal loan-shark) and that is why banks are willing to give us those plastic cards to spend, and hey, we are paying a small fraction only monthly, while we could continue to shop? Haha ... I was such a naïve lecturer-in-debt.

Today, I do still have my credit-cards .... but with zero balance, no penalty(last time, I don't have enough to pay on time and they charged u late payments!!) ... use it wisely to gain points, waiving the annual fees while could redeem some gifts/items! Use the credit-card to our advantage, and not to abuse it.

Step 4: Look at your debt-relief options.

I didn't qualify for any debt-relief because I had a high salary, but I definitely looked into it. This simple step can save you thousands of dollars. The bad thing is that there are a lot of scams out there, so you have to tread lightly.

Debt-relief options include: loan forgiveness programs, consolidating all of your loans into something more manageable, debt settlement, or credit counseling (reducing the interest rates). It is absolutely worth making the calls to see what your options are, but be sure to consult a financial adviser before agreeing to anything.

TEH : Hmm ... re-finance my house loan was the only step I have taken in this step he listed. I think our gov came out with a body where they will help you to re-structure your debt. Do check them out as they could give good advices, hopefully.

Step 5: Pick your strategy.

There are two core debt repayment strategies.

Debt Snowball: Pay the minimums on all loans, but pay off as much as you can on the loan with the smallest balance. This works because you start to see progress as you reduce the number of loans you have, and we're psychological creatures - we typically need to trick ourselves into success.

Debt Stacking: Pay the minimums on all loans, but pay off as much as you can on the highest interest rate loan. This is the method I used, because by paying off the highest interest rate first, you pay less interest. To me, if it makes dollars, it makes sense. If you have trouble staying disciplined, choose the Snowball method.

Otherwise, option B is your best bet.

TEH : I chose option B ... I slowly cleared my credit-card ... by taking personal loans!! Yes, I took 2-3 personal loans merely 4-5 years ago  ... to clear my credit-card debt as it is only logical things to do. Unless if you take the personal loans to buy some gadgets, items ... that is again, killing ourselves financially.

Discipline ... is in everything we do. We need to make sure our DECISION (step 1) and our goal of getting out of debt is our priority. Well, I have cleared my personal loans too ... 2-3 years ago. Today, I do still have loans ... where I took from Maybank to be transferred to ASB (I have explained this ... ASB dividend about 7%, loan is below 5%, logic?) and recently, due to market correcting sharply, I took a new personal loan (7% interest) to buy into BJToto at current level.

The point ... have a strategy ... be discipline, clear it off. One should not take personal loan for entering stock-market(tho I did in 2008) as we could lose both way!!



Step 6: Make more money!

This is the exciting step, but it also requires the most amount of work. I interviewed 75 wealthy entrepreneurs for my book "Make Money, Live Wealthy," and a surprising number of them found themselves in over $75,000 worth of debt at one point.

Each one of them has the same secret for overcoming massive debt in a short period of time: hard work. Whether it be working a lot more hours, getting a second job, or in my case learning how to invest, it is well worth the sacrifice to be able to be debt-free much earlier than you otherwise would.

As an engineer in the corporate world, I was fortunate enough to have a good salary. I also didn't have a family to support, so that allowed me to keep more of what I earned and take on more risk.

From day one on the job, I started investing in my retirement fund, but then I also started investing in a taxable account more and more. I don't condone this for most people, but once I started making a higher return in the stock market than I was paying on my 3-8% loans, I started paying the minimum payments each month while I watched my investments grow even faster. This is an ultra-risky method that can cause you a lot more harm than you're in (see Step 2), but if someone were confident that they could get more than double the return (after taxes) of a debt, I wouldn't be anyone to stop them. Again, if it makes dollars, it makes sense.

TEH : Needless to say, we need to increase out income. Do second job. Create plans and ideas ... and work on them. Afterall, you are in huge debt and nothing to lose?! Being a lecturer in Sabah, we are lowly paid ... so, I have to come back(sacrificing many things!) to have higher pay and opening more opportunities for me to increase my income! Sound logical again ... but, let me be frank ... it is ALL ABOUT HARDWORK.

If my mind was NOT opened(step 1) ... if I am not discipline enough and to work hard on my financial goal, I do not think so I could clear off my debt in such short period of time!! Plan ... 3-5 years ahead and work on that!

Yes, I have to admit that 2009-2011 was really good for my investment in stock-market and I will withdraw some profits end of year to clear my debt. Today, I have no debt to clear and I simply let my funds to grow and consistently pumping in the funds in monthly basis. The cash will come in handy when market collapsing(not now ... now is only correction). So, keep cash ... be ready for opportunities. Invest in ourselves ... and work hard.

Step 7: Delete debt.

Finally, after nearly three years of receiving bill after bill, I got sick of having the cloud of debt over my head. I still felt strapped and every time I saw an email from Sallie Mae, I remembered that sickening feeling I got from opening the envelope back in college. So, at the age of 24 with a $35,000 balance remaining, I pulled my money out of the stock market and paid the rest of my student loans off in full ...

And immediately started to tear up.

Every single day to that point I worried about money. However, as I pressed "submit" on that last payment, a rush went through my body that I'll never forget. For the first time in my adult life, I felt completely free. They say that paying off debt is a "weight off your shoulders," and I can tell you that in fact it is.

TEH : Yes ... I have finally deleted my debt from my system in 2012 .. in total. I do still have car-loan, house-loan, personal-loan ... but those are manageable. We will never pay cash to buy a car, even if we have the cash(unless too much cash, that is different la)

That relief feeling ... so, now is the level to maintain debt-free ... and making sure income is much more than expenses.

As I will be shifting to a better place to stay, I will have to make sure the expenses maintain at low. In fact, I will like to see more cut in dining expenses!! Less items too.

Income - Saving = Expenses.

Step 8: Celebrate.

Paying off debt is an accomplishment worth celebrating. Millions upon millions of people are burdened by debt, and it's definitely a challenge to get ahead if it is constantly holding you back. By escaping the debt trap, you can start to really have compound interest work in your favor, and that is when you can really build wealth. As a result, I believe it should be financial priority No. 1 on your way to financial freedom.

TEH : Yes ... I do celebrate ... buying myself gifts for working hard diligently and very discipline, focus in my goals. I bought myself speakers!! Yes ... I love music/songs ... so, each year ... I m getting myself a birthday-gift, and it will be speakers/headphone/earphone.

One day ... I know I could afford a room ... to listen to my music ... in my leisure time. That is the goal!!

Till then ... I have to still working hard. No more debt ... till I clear off ALL my cars/house loans ... then, I will be financially free?


This is my current wall-paper for my new notebook. I have escaped E ... now still in S, moving to B and having I.

Note : Stock-market is the vehicle I am using ... to achieve my financial freedom. In July, I quitted my full-time job. Next year, 2015 .... I will be more focus in my trading, and believe I will do very well here. Wish me luck.

Plan ... plan ... plan ... and work your plan. Be determined to get out of debt. Stay frugal ... and do not give in to others who do not understand our plans. Only WE could determine our financial health.

Good luck.

TEH