This episode is sponsored by National Debt Relief, a Better Business Bureau A+ accredited
business with over 13,656 client reviews and growing daily.
They can help you reduce your debt to a fraction of what you owe if you qualify.
Get a free report comparing all your debt relief options at nationaldebtrelief.com/HTA
[♪♩INTRO]
In part one of our two part series on debt, we talked a little bit about different kinds
of debt.
In part 2, we're going to talk about a couple strategies to get out from underneath it.
First off, though, I think it's important to take a moment to address some of the psychological
responses that owing money elicits.
Debt has a nasty way of making you feel fearful and full of self-loathing, but neither of
those responses are actually helpful.
When you're in fight-or-flight mode, you are not equipped to analyze a situation and formulate
an effective plan of attack.
So, just like you wouldn't let an alcohol-drunk friend drive a car, don't let an adrenaline-drunk
you drive your brain.
Do your best to stay calm, so you can be at your best when you need to think critically.
Remember, you are more important than your debt, and if you're struggling, you're not
the only one.
So let's dig in, get uncomfortable, and talk about some strategies for dealing with
debt.
Strategy Prep: Create a Budget The first step to any financial plan is to
understand what's going on with your money.
Creating a budget is a way to take a look at how much money is coming in, how much is
going out, and where it's going.
Check out the description for links to a few videos on creating a budget.
Strategy One: Adjust Spending Now that you've made your budget, one of the
most theoretically simple ways to save money is to adjust your spending habits.
And yes, that is code for spend less money.
Remember that there are a lots of people who get paid lots of money to get you to spend
more money, and they've got tools to make you feel like you need stuff that you probably
don't.
Your budget is a tool to help you recognize some of those tricky money pitfalls, and it
can feel empowering to identify them, and cut spending in non-essential areas.
Each adjustment you make can be one step towards putting a little more of that debt behind
you.
However, no one who inhabits the real world seriously believes that you'll be able to
buy a house or pay off large student loans just by skipping avocado toast, no matter
what some rich Australian guy says.
Adjusting your spending is most likely going
to work in concert with other strategies, and doesn't mean that you're a bad person
if you buy a latte every once and awhile.
Strategy two: Create Additional Income.
The flip side of adjusting your spending is getting new income.
This can seem kind of daunting, especially if you've never done it before, but depending
on your situation, side-hustling these days can be pretty accessible.
This can mean many different things.
You can monetize a hobby like making jewelry or painting, tutor students or teach english,
drive for a rideshare service, run errands for someone, or even start your own business.
Just make sure you keep track of all the income you receive, and the expenses you incur for
tax purposes.
That can bite you later if you don't.
Now the next strategy is less about trying to pay more on your debt, and more about trying
to arrange your payments so they do the most work.
Strategy three: Snowballs and Avalanches.
If you have multiple sources of debt, and can afford to pay more than the minimum payment
on each, you are faced with the choice of what percentage of your money to send where.
Rule number one, research seems to indicate, is to focus on one loan at a time.
This applies to both avalanches and snowballs.
In the snowball method, you pay the minimum amount on all sources of debt, and use anything
left over on the smallest debt.
Once you finish paying off that debt, add its minimum payment as well as the extra
money to the next smallest debt, until you're putting all of those minimum payments and
leftover money towards one large debt—a magnificently large snow boulder rolling towards
being debt-free.
This strategy has the benefit of giving you quicker milestones to celebrate, and a visible
amount of progress made.
However, it completely ignores interest rates, so you might actually end up paying more money overall.
The avalanche method is similar to the snowball method, except instead of paying off the smallest
debt first, you pay off the debt with the largest interest rate first.
This strategy has the benefit of reducing the amount of interest you have to pay overall,
but it isn't necessarily as motivating as the snowball effect, because the results are
often less visible.
If you feel highly motivated, or you have a loan with an extraordinarily high interest
rate, the avalanche method is probably the way to go.
But studies have shown that the snowball effect may have better long-term outcomes, because
we're human and we don't always behave rationally.
If you feel your motivation flagging, consider knocking out a smaller debt first.
So mix and match depending on your circumstances.
They both have snow-based names so your metaphor still makes sense.
Strategy four: Ask an Expert.
Avalanches and snowballs can only help you so much if you have some extra money to put
towards your debt.
But what about if you're barely making ends meet or just making the minimum payments on
your maxed out credit cards?
If you feel like you're not sure which path you should take, it might be worth calling
in an expert.
Right off the bat, though, while there are many credible and helpful services out there,
there are also services that are unhelpful and scams designed to take advantage of you
while you're feeling vulnerable.
Before you dive into any service, make sure you do plenty of research, and read everything
carefully before signing.
The Federal Trade Commission has a pretty good guide for researching services, link
in the description.
Credit counselors will review your budget and provide education about debt management.
They may also suggest enrolling in a debt management plan—a strict repayment schedule
that may result in lower interest rates or other benefits, depending on your individual
circumstance.
Some credit counselors charge for their services and some don't, so make sure to ask about
it if you sign up.
You'll still have to pay back everything you owe but you may be able to do it at a lower interest
rate.
And finally, debt settlement programs -- like National Debt Relief, who sponsored this episode—can
also be a helpful resource.
These programs charge you a portion of your debt in exchange for negotiating with creditors
on your behalf to reduce the amount you owe and consolidate your debt into a single lump
sum.
You'll have to see if your situation qualifies, but if it does, you could pay back a fraction
of what you owe in less time compared to making minimum payments over the next ten to twenty
years.
Debt settlement is a good option if you're drowning in a large amount of unsecured debt.
National Debt Relief recommends their program to folks who have over $10,000 in unsecured
debt—which is the kind of debt we talked about in part 1 that doesn't have collateral
behind it.
And remember, the very best thing you can do to combat debt is to educate yourself,
so just by searching Youtube, watching this video, you are already off to a good start.
For this series we partnered with National Debt Relief, a debt settlement program with
a Better Business Bureau A+ accreditation and over 13,656 client reviews from folks
who are no longer drowning in debt thanks to their services.
They're completely performance based and charge no fees until their clients see their
debt reduced, and offer a free savings estimate that can show consumers how much they can
save with no obligation.
Visit https://www.nationaldebtrelief.com/HTA to get a free report comparing all your debt
relief options.
So just like you wouldn't let an alcohol-drunk friend drive a car, don't
don't let an adrenaline-drunk brain... drive your brain...
[laughter]
Theoretically simple ways to heff—hevffhevff
And they've got tools to make you feel like you need stuff that you probably don't
or to spend money when you probably don't have to or even want to, you just do it
because they're so good at manipulation things...
They've done lots of research on you.
They've done so much.
SciShow Psych: we talk about that a lot. We talk about that a lot.
There's a thing, there's a whole—I probably shouldn't do it
but there's a whole—like, we keep doing it.
Like, I like these—these—where it's like,
"Here's how it works... and why it works... and it's still going to work"
How much they s— [garbled]
Visit https://www.national—
Can I just say National Debt Relief.com?
Ok [laughter]
For more infomation >> How to Paint Kitchen Cabinets - HGTV - Duration: 1:36. 
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