Mark Kohler walks through six steps to eliminate debt: make minimum payments while building an emergency fund, use the debt snowball method starting with smallest balances, create side income to accelerate payoff, expand your emergency fund to four months, keep credit cards open but use them sparingly, then leverage good debt like mortgages to build wealth.
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Hi, Mark Kohler here. And I want to talk about debt, getting out of debt and staying out of debt. And this is such an important topic for Americans, Americans that want to live a little more comfortably without as much financial stress, and for those that are budding entrepreneurs or business owners and even seasoned business owners that have the ups and downs of business, that rely on credit cards a little too much. I've been in all three places, folks, so let's knock this out. And I think I've got some tips here. They're going to help you immensely. Now, as I go through these six, the important thing here is to have a plan and stay committed to it. This doesn't happen overnight, but it will change your life and you'll start to feel breathing room almost immediately. Now, number one on this list is to make minimum payments on your credit cards. Right now. Just make minimum payments. Don't get visions of grandeur or get, you know, bold and aggressive and courageous and start paying off one of these cards. Just make minimum payments on all of your credit cards and start creating an emergency fund. Now, I give Dave Ramsey credit for this. He's amazing. And he talks about building that emergency fund because life happens and that's a lot of times what ends up on carbs. So you've got to have an emergency fund. Start with a thousand dollars, five thousand dollars, something that makes sense for you based on your economic situation. Could be as low as 500 bucks, but have something in an emergency fund so when life hits you, you can go to your emergency fund rather than back onto your credit cards. So make minimum payments and build an emergency fund that's a buffer between you and using those cards. Again, number two, we're going to start a debt snowball. And this is after you've created your emergency fund. Now, this isn't a program or a cost or whatever. It's something you can easily maintain on an Excel spreadsheet. And if you email me markjcohler.com I'll send you an Excel spreadsheet you can use as a template and little videos from an expert. I love that helps me help with clients having debt problems. And so you're going to love this. Debt Snowball is a list of all your debts and amounts and balances and minimum payments. And you're going to start with the least balance, the smallest balance first, and then work your way up. You'll see it in the debt Snowball video I send you. You can study up on this. It's very common. But you want to get your Snowball going as soon as you get your emergency fund done. Number three, you've got to start creating new revenue. Now this is important because it's hard to dig out of a hole if you just have fixed income. And some of you have a great day job you love, you've gone to school, you've been trained for years and you've got this W2 and that's it. That's a glass ceiling though, folks. You've got to break through that. I want you to build a small business on the side and we're going to use this revenue to get out of debt faster and then build more wealth in the future and to stay out of debt. This could be selling jeans on ebay. It could be something an Amazon reselling account. It could be a service based business doing landscaping or cleaning buildings at night. I don't care. I love small business. And you've got to build this into your life and it's going to bless you for many years to come. I've got my little eight steps to build a small business. You're going to love it, check it out sometime. But it's not as hard as you think. And there's ways to build that extra revenue. So get on it. Number four, now that you're out of the bad debt, all those credit cards are gone. I want us to build up a four month reserve. Before it was that emergency fund. Maybe it's one month of just living expenses and it's a buffer between you and those credit cards. Now I want a four month reserve. That four month reserve has a lot of purposes. For example, staying out of credit card debt, those bigger expenses that can shock and surprise you and those quick opportunities in business where you need money quickly after some good due diligence and making smart decisions. But having a four month emergency fund is another cushion that'll allow you to take your life and business to the next level. So you build it and you're going to be grateful you did. Number five, don't cut up those credit cards. Keep them and build your credit. Building credit is about keeping open lines of credit and showing the willpower that you don't run to them every time you're at the counter and some department store says, do you want a credit card? You say, no, I've got my credit cards. You keep very low back balances. I've got radio show links down below of how to build corporate credit or build personal credit. There's two different topics there. It's so powerful. So I want you building credit and keeping those credit cards, don't cut them up. Just use self restraint. Put them in the drawer and keep them open and your credit will start to climb. And number six, I want you to get into debt. That's right. But good debt. I want you to use good debt. Buy real estate rental properties and start building additional cash flow. Maybe even buying your own home if you haven't done it already. Having an auto loan or home loan or even rental property loan. That's okay debt. It's good debt. Now I'd love you to pay off your car, but it's not the end of the world. It's the credit card debt that kills us. So start using good debt to build your business. Building corporate credit, personal credit, buying rental properties and creating additional cash flow. And with all those monthly payments gone and that additional revenue you were building back in Step three, this is what's going to take your life to the next level and help you better live your American dream. Thanks so much for watching and if you found that helpful, please look in the description below. I've got links to my tax and legal library, my QuickBooks training videos, how to start a small business 50, 60, 70 videos, some as long as 30 minutes expand, explaining more information on tax and legal strategies that will change your life. Also, if you'd like to subscribe to my newsletter or check out my social media links, please click here. There are weekly free tips and strategies and articles that you'll find extremely helpful and I would appreciate it if you'd subscribe to my channel. I've got so many videos here I produce every week on my YouTube channel and I'd love to give you a ping every time I shoot a new video. Thanks so much and keep living the American dream.
