How to Get Out of Debt with Sheri Riley’s P.O.W.E.R. Process

*This post contains affiliate links. That means I receive a small commission that could help me on my debt-free journey —at no extra cost to you—if you make a purchase using the links.

Getting out of debt is quite simple. There are three steps:

  1. Spend less.
  2. Earn more.
  3. Pay off debt with the difference.

Simple, but not easy. Debt slayers are acutely aware of this. If it were all about the  numbers, then everyone would be debt-free in a heartbeat. But the debt-free journey also calls on you to fix your mindset and find strength, courage and creativity you probably didn’t think you had.

Sheri Riley’s awesome book Exponential Living: Stop Spending 100% of Your Time on 10% of Who You Are lays out a solid process for setting yourself up to achieve any monumental task. She calls on you to live in your P.O.W.E.R.

  1. P – PerspectiveAdopt a point of view that empowers you.
  2. O – OwnershipOwn what is important to you.
  3. W – WisdomIdentify your one or two next basic steps.
  4. E – EngagementCommit to the implementation of those steps.
  5. R – RewardStay consistently engaged with the process in order to experience the positive outcomes.

Let me explain how to use your P.O.W.E.R. to slay debt.

P – Perspective – Adopt a point of view that empowers you.

If you want to make a change in your life or respond effectively to a challenge, the way you look at the situation—your perspective—is critical.

Sheri writes that if you see the situation as an opportunity or chance to elevate your game instead of a crushing blow or bad luck, then you’re halfway to a positive resolution. I believe her.

On a podcast, a journalist who eliminated over $100,000 of debt in two years said he stopped thinking of his debts as burdens. Instead, they became targets. Then he set his sights on getting rid of the first one on his list. And then the next one. And then the next one. I had started using that tactic, too. Each line in my debt snowball has a name, for example, Operation: I’m So Over Undergrad Loans and Operation: Old Navy is Old News (a credit card). Those names make me feel empowered. It’s like I’m a soldier on a mission, no longer the prey.

How do you view your debt and your current circumstances? It’s easy to feel down on yourself. Being $40,00, $50,000 or $100,000 in debt is no fun at all. But if your perspective is “I’ll always have debt,” well, chances are you’ll always have debt.

Forgive yourself for your past money mistakes. Shed limiting beliefs—yours and those you’ve adopted from family, friends and society. And instead of spewing negativity into the universe, speak positively about where you want to be and how you’ll get there. Say “I’m going to be debt-free. Wealth is mine!” That’s the self-fulfilling prophecy you want to manifest.

Get Out of Debt with the POWER Process

Click to read more about the P.O.W.E.R. process.

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12 Tips for Staying in the Debt-Busting Mindset

*This post contains affiliate links. That means I receive a small commission that could help me on my debt-free journey —at no extra cost to you—if you make a purchase using the links. Debt-fatigue is real! Paying off debt month after month gets old, but it’s necessary to attain financial freedom. Ain’t nothing wrong with reciting affirmations (I love it) and reading books (I almost love this more than chocolate). But we already know how awesome those practices are for believing in and educating ourselves. Here are 12 other tips for staying motivated along the debt-free journey.

1. Imagine your life with no debt and huge savings.

Really. Just imagine that. Think about what your life would be like without sending $400 to your alma mater each month for that 10-year-old degree. Think about the vacations you’ll take with your family and the memories you’ll make. Think about the smile on your kid’s face when you watch her soccer game instead of moonlighting at the coffee shop. Think of putting all of that credit card interest in your Roth IRA. Better yet, go to a retirement calculator and type in what you pay in interest every month as the monthly contribution to see the what your money could be doing. If none of these scenarios motivate you, then I don’t know what will. Always remember why you’re paying off debt in the first place to stay focused.

2. Repeat: “Budgets are my friend. Budgets are my friend.”

Is that an affirmation?! Ha ha! Anyhoo, some of us think budgets suck. But nah! They don’t deprive you of anything. Think more positively. Budgets (a.k.a. spending plans or financial freedom maps) help you achieve your goals quicker and easier. When you direct where your money goes, you don’t wonder where it went at the end of the month or whether you’ll reach your credit card payoff goal. You’ll know that you’ll achieve your goal in three months by paying $200 each month. You become the boss of your money.

3. Nickname accounts according to your goals.

“Savings x5678” doesn’t provide much motivation or clarity as to why you’re saving in that account. Put some respeck on that name! Change it to “Summer Disney Trip” or “Dream Home Down Payment” to keep your goals top of mind. When you remember why you’re saving, you’ll be less likely to dip into that account for jeans. Got a credit card balance you want to crush? Go to your online dashboard and change the name from “Visa x1234” to “Pay off by July.” Feel free to change your passwords to reflect your goals, too. How about $lashD3btby2020? 12 Tips for Staying in the Debt-Busting Mindset Click here to get more tips.
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Save or Pay Off Debt? Or Both?! Use This Decision Map for Guidance

Dozens of best-sellers, financial gurus and conventional wisdom will tell you to save for retirement no matter what part of the financial journey you’re on. “Save yesterday!” they shout. The one person who goes against the grain is Dave Ramsey. The man even tells people to stop getting their 401(k) employee match to put every red cent into paying off debt. Extreme much?

Here’s why? The power of focus. Dave says when people get “gazelle intense” about slashing debt in Baby Step 2, they do it in 18-24 months on average. They stop 401(k) contributions, sell everything but the kids and create extra income streams during this intense season. These folks are determined to pay off lenders quickly so they can start paying themselves.

But not everybody’s drinking the Kool-Aid. They understand the power of compound interest over time. Many folks in the debt-free community are savings for retirement and eliminating debt, forgoing Dave’s advice. I’ve been tempted to follow suit.

Are you on the fence, too? Ask yourself these questions to determine whether to save, slash debt or save and slash at the same time. See what I decided at the end of this post.

Do you have at least $1,000 in savings?

Yes? Awesome! You can start aggressively paying off debt. Having $1,000 or one month’s income saved means you can put out fires like paying off an unexpected dental bill or replacing tires without getting into more debt. That’s key!

If ‘no,’ chill out on aggressive debt payments. Pay the minimum until you save up $1,000 in an account you can easily access when emergency situations arise. An interest-yielding account at a credit union or online bank that’s separate from your main checking account and debit card will come in handy for this. If you feel more comfortable putting away $2,000 or a full month’s income, then go with that. Personal finance is personal. These questions and tips are guidelines.

Save or Pay Off Debt Decision Tree

Click here to read more and find out what I decided.

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8 Things to Consider about Balance Transfer Cards (Freebie Included!)

Balance transfers are fantastic—IF you use them correctly. That’s a big ‘IF.’ These transfers move a balance from an interest-yielding card to a new card that offers an introductory interest rate as low as 0 percent for a certain time period. 

That means you’re putting money toward your balance—not the pesky interest—over that period, for example, 6 or 12 months. You can even put more than one balance on a new card. This tactic can help you get out of debt quicker and save hundreds of dollars overall.

You MUST make up your mind to kill this debt before the carriage turns into a pumpkin or you’ll be S.O.L. and stuck with paying interest again. Download your free worksheet here to get started.

The Tale of Two Cards

In early 2015, I got my first balance transfer card, the Chase Slate. Chase paid Old Navy, making it seem as if I paid the card in full. Then I started paying Chase without worrying about interest. I killed that debt well before the April 2016 deadline with a huge medical bill reimbursement.

Transferring your balance won’t do you any good if you don’t pay it back in time.

I got a little happy and took advantage of another transfer offer in 2015. Well, it took advantage of me. Ha ha! Life happened. My paid-for, 2001 Mazda croaked the day before Thanksgiving that year. I got a new car—and the $250 monthly payments to go with it. That meant my huge payments to the balance transfer card stopped cold turkey (Pun unintended). Then, I started spending money to prepare for China. 

I couldn’t pay the card off by November 2016 and have been getting hit with about $40 in interest each month ever since in addition to the $2,000-plus balance. IT SUCKS!

I’m unsure if I’ll ever get another transfer again, but if I do, I’ll heed these tips, make a concrete payback plan and stick to it come hell or high water.

What To Consider When Selecting A Balance Transfer Card is a great place to start comparing balance transfer cards. When you look around, check out these details:

Read more and get your free worksheet.

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7 Reasons to Become Debt-Free

The best debt is the debt you don’t owe anymore! — Patrice C. Washington

I’ve gotta be honest. I’ve been plugging away at debt for a few years. The cost of debt really hit me when I left graduate school in 2013 and saw the colossal debt mountain obstructing my view of financial freedom. I’ll never forget opening up that first bill in my mother’s house that summer. My eyes leaped out of their sockets and my mouth dropped, forming an oval of surprise.

Almost four years later and several monthly payments of $350, I still owe more than the original balances. These federal loans are just my highest monthly payment. Small undergraduate loans and three credit card balances stand in my way of financial bliss.

I’ve known how to get out of debt for years. It’s simple:

Live below your means. Put the difference towards your debts. Don’t acquire more debt.

It’s just like losing weight. You have to burn more calories than you consume by exercising and eating well. Easier said than done. The why‘s more important than the how. 

In order to climb Mount Debt, I must always keep my why front and center so I can push through the discomfort, the days when I want to blow my budget and the nights when I want to say “Yes!” to my friends’ invitation to hang out. The motivation must be strong.

Here are 7 reasons I want to get out of debt—and stay out of debt!

7. To bless others. Right now, my natural talents are my gifts. Need someone to spruce up your resume? I’m yo’ girl. But, sorry, I can’t donate $50 to your cause right now. I’m my own cause. Ha ha! I can’t serve others the way I want with my money being tied up in debt. I can’t help the poor if I am the poor. This debt has gotta go so I can spread more than my wealth of knowledge to my community.

Reasons To Become Debt-Free

Keep on reading!

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