“Being in debt,” says Hill Harper, “is like being physically unhealthy– they both exact a toll on us [and they] both excise a cost on our lives.” In the early 2000s, Harper recalls making an investment that he was sure would pay off. He did so while still in considerable debt from noncommercial real estate investments, and a mortgage, but thought that this investment would carry him through. “The business I invested in was supposed to become the equivalent in online advertising to what Google is to search engines,” Harper said.
However, $350,000 and less than a year later, the company and Harper’s investment were gone, just like that. “I’m still recovering financially from that setback, and I learned my lesson about making risky investments,” he writes in The Wealth Cure. “How many times had I been taught to not get sucked into a get-rich-quick scheme? I could have paid off my house!” When all was said and done, Harper still had all of his debt, compounded by a loss of $350,000.
So, how did he climb out of it? By evaluating his wealth not just by the amount of money he had, but by the values he holds and built his life on. Harper made himself a list of Wealth Factors, at the top of which were “to not let myself fall into the trap of debt” and “to live credit card debt free”. Because not being in debt was important to Harper from a monetary and spiritual perspective, he was able to take action and get his wealth back to health. If you, too, decided that living debt free is a strong factor of your personal wealth, here’s some steps you can take to get yourself on your way:
Organize. You can’t know how much wealth you need to become debt free without writing everything down. Examine past bank statements, credit card bills, or any other proof of expenditure and analyze your purchases. What are your recurring costs? What things do you need every month? What things can you cut back on? What are my monthly payments, total balance, interest rates, terms, etc.? Have a system in place that will help you understand your starting point.
Pay more than your minimum payment. By increasing the amount that you pay a bill each time, you decrease the amount of interest you’ll accumulate overall and be able to pay your debt back faster. Don’t pay more than you can afford, but exceeding the bare minimum will pay off in the long run.
Focus on one thing at a time. Trying to pay off your student loan, auto loan, and your credit card debt all at the same time won’t yield the success you think it will. Focus on eliminating one thing at a time, paying more on one loan or debt source to take one thing off your plate more quickly. Using something called the “debt snowball”, you can get your smallest debt out of the way before moving on to the next, and by repeating this cycle, before you know it, your debts are gone (BankRate.com)!
Set Goals. What is it that’s motivating you to take charge of your finances? What’s the first thing that you’d like to pay off? What will make you feel the most free when it’s paid? Reflecting on your priorities and setting both short and long term goals for success will help you feel more in control and give you something to look forward to when you are financially free!
Be flexible. Sometimes, getting out of debt requires a little finagling. You may need to rearrange some things to achieve your goals: your budget, your mortgage, even using your tax returns a little differently than you’d hoped. It can be difficult to need to move things around when you have a set way about how you’d like to handle your debt, but the reality is that the more flexible and open minded you can be, the faster your debt will disappear.
By following these steps, you can help not only yourself, but your community step out of debt and into financial freedom. Banks and other institutions like payday lenders feed on the wealth of Black Americans, but when you take charge of your dollars and cents, you keep them from taking away your power. Start today.
