Steve Kallam’s The Real Way To Get Out of Debt
Have you heard the lender ads that will loan you enough money on your house to consolidate ALL of your debt plus give you a little extra to take that much needed vacation? What a disservice that is! They are actually creating more debt for you.

To get rid of your debt you must have a reasonable plan, if you just follow the steps I’m presenting, I promise you will immediately begin sleeping better at night! 

Oh, this is very important! If you have a spouse make sure they are involved with your plan. Maybe they don’t know how bad it is. You have to get your spouse involved or this will not work.

 Let’s put things into a few easy steps.

1. Make a strong commitment to yourself that you will not borrow any additional money during your debt reduction plan. 

2. List out all of your debts.
It’s incredibly hard to chase after goals that aren’t clear or concrete.

The first thing I want you to do is list out all the debt you have. Get one of those old fashioned whiteboards, hang it in a private place like your closet and go to town. This is helpful because you can see exactly where you stand and watch your debt shrink before your eyes.

When you list it all out, make sure you organize the list from the smallest debt you have to the largest. Make columns for the Balance, Minimum Payment, Interest Rate and the amount you will pay each month. You will use this list as a reference guide throughout the duration of your debt domination. It might seem discouraging to list it all out at once, but view it as giving your enemy a face — now you know who you’re fighting; now you can go and win the fight. 

3. Set a budget. 

Most of us think we are making headway if we pay extra on all of our monthly payments…..I have a better strategy. Total your minimum monthly payments then decide on a reasonable amount that you can pay over and above that minimum, use the extra money that you’ve been paying above all the minimum payments due. Be aggressive, the amount you decide on will determine how fast you get out of debt, but do not make this amount unreasonable, if it’s too high you will not stick to it.  

4. Pay off the smallest debts first. 
Pay the minimum payments on the big balances and pay off your smallest balance first. Use all your extra resources from your budget.  Once that payment is gone, add that amount to the next smallest balance. Keep this system going until you have paid off the smaller balances.  

5. Once the smaller balances are paid off, work on the big balances.

Pick the debt with the highest interest rate and start attacking it! If you can, get a 12 month no interest credit card to pay off the balance (make sure there is no annual fee), then aggressively put all of your extra resources into that payment. The big balances will take longer to pay off but stick to your plan and you will see the progress. 

You must be aggressive and stick to your plan, take time to review your whiteboard regularly, it will keep your commitment fresh in your mind and give you a feeling of pride and freedom.

Once your debt is gone you will have money to put towards the things you couldn’t before like tax saving retirement and your kid’s tuition. 

Please let me know if I can help in any way, we will all be better off if we are debt free!

Best Regards,

Steve Kallam

Virginia Accounting Services
(757) 857-1880