The Debt Dance

The following is,

in a nutshell, how the Debt Dance method will get you out of debt and help you design the life that you really, really want.

First: Decide WHY you want to change. When you focus on the “why” you want to re-design your life, getting out of debt becomes a wonderful bonus.

Make a list of your loves, your dreams, your “gotta do/have before I die” kinds of things.

Let’s use Sarah as an example: she has always dreamed of:
-going to Africa,
-using investment properties to build a comfortable retirement,
-sending her boys to college without going into debt,
- opening an antique shop.

Write your  list down, but don’t argue with yourself that you can’t do it, or it can’t be done, or you’ll fail, or your friends/parents/spouse won’t support you… Just write it down.

Next: Make a list of what you absolutely must get rid of in your life.
Using Sarah again,:
-she hates her job and has been unemployed recently so she’s afraid of losing even this horrible job,
-she desperately wants to get rid of her credit card debt and student loans.
-she wants to get rid of her stress ailments and feel energetic again,
-she wants to stop fighting with her husband about every dime they spend and start having fun again.

Whatever it is that keeps you up at night, or makes you miserable, put it on this second list.

Third: Prioritize each list. What is the most important thing that you want? What is the most important thing you don’t want? (You may break some of these items down into smaller goals)

Sarah decided the two things she wanted (and she hesitated to even write them down):
1. Open that antique shop she’s envisioned for ten years, and
2. Buy one investment property.

Sarah decided what she did not want anymore:
A. Her debt
B. Her fights with her husband over money.

Fourth: Put the lists together and set new priorities. (Now many will be interrelated, e.g. you may want to decrease or eliminate your debt so that you can do something wonderful, like buy a cabin down at the lake, or bicycle through Ireland, or build/buy your dream home.)

Sarah worked hard on combining these issues and came up with these goals:
I. Cut up the credit cards except one and put it away. Pay off half of the credit card debt and half of the student loans within the next eighteen months. When the debt  is completely wiped out sock money away for an investment property.
II. Take a small business course and an antique appraisal course.
III. Make mutual financial goals with her husband that include going on a date/doing something fun every payday.

Fifth: Take a look at your current spending—put your figures on a tally sheet or spread sheet if you like. What priorities does your current spending reveal? If you’re spending money on clothes or nights out or video games or if you are constantly piling on more and more debt ask yourself if these are what you really, really want in life.

NEXT: Write down:
◄Your current income.

SUBTRACT:
◄what you must pay every month (e.g. rent, insurance, prescriptions, utilities, debt minimum payments, etc.),

THEN THE MAGIC BEGINS…

Decide what money you want to put on your dreams.
In Sarah’s example she and her husband have $1,000 left after paying minimum required bills.
Her spending plan (or budget) looks like this:

SUBTRACT:
◄what leads to your dream:
-A $200 extra payment on her credit card with the lowest balance/highest interest rate,
-A $90 extra payment on the student loan
-$50/month toward her business (education, buying fixtures or stock)
-$60/month for “date nights”

WHAT REMAINS IS:
◄the spending categories that you can control: (e.g. groceries, entertainment, dining out, clothes, cell phones, etc.) All the things that you can decide how much to spend on and the decisions that make your dreams possible.

HERE IS THE KEY: the middle category is just like your Get Out of Jail Free Card. You make a very powerful decision that will transform your life when you decide to invest money in what you really want.

Getting out of debt (and stopping the debt practices)  is usually a critical factor in reaching our dreams. It is almost impossible to carry the burden of debt into new endeavors. Spending choices will also become much easier as we rank the “thing” we are considering buying against the dream we are now seeing as real. The baseball tickets, the new designer suit, etc. simply do not hold up to the BIG DREAM.

You may decide to make further changes in your life to speed up the progress (change jobs, earn a degree or trade, take in a roommate, sell your house, sell your car, start a business on the side.)

The wonderful thing about this method is that your motivation doesn’t fizzle. As you begin to spend money on your dream you build excitement. It becomes real. Every small step brings you into a new world of possibility.

Imagine your life actually filled with what you have always wanted. It can be. It is possible.

NOW HERE’S ONE OF MY FAVORITE QUOTES:

“So many of our dreams at first seem impossible, then they seem improbable, and then, when we summon the will, they soon become inevitable.”
Christopher Reeve, From speech at Democratic National Convention, August 1996

Your comments are welcome.

Face Your Dreams, Embrace Your Loves