115R | How to Get Out of Debt

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Feb 22, 2019

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Bonnie Traux

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ANECDOTE

Job Loss As A Freedom Check

Brad describes his wife Laura being let go from her CPA job and reacting with relief rather than panic.
Their FI status gave them freedom to view the job loss as choice, not catastrophe.

INSIGHT

Partial FI Creates Real Choice

Progress toward FI gives you optionality and control when unexpected events occur.
Even partial savings buffer transforms a layoff from devastation into a choice.

ANECDOTE

Bonnie's Recovery And Skill Stacking

Jonathan recounts Bonnie Traux rebuilding her life after a financially damaging first marriage and reaching FI by 43.
Bonnie combined many side hustles and skill stacking to recover and accelerate savings.

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115R | A how-to conversation about strategies for tackling consumer debt, a review of Monday's episode with Bonnie Traux, and a few updates about the ChooseFI community.

Brad's wife no longer working as a CPA – although she was technically laid off, she's excited for the extra time in her schedule.
Being at FI gave Laura the ability to be happy for her previous employer and move on with a smile.
Bonnie Traux, from Monday's episode, is an ultimate side hustler.
If you're stuck, you'll have to do something different if you want a different result.
Bonnie reached financial independence in about 13 years.
Before starting to save, Bonnie spent years paying down consumer debt as her husband was continuing to build it.
The journey towards financial independence doesn't start at zero – it often starts with tackling debt.
How to tackle debt
- Use account-tracking software - examples: Mint.com, YNAB (You Need A Budget), or even Excel or a pen and paper.
- Know what's coming in, and what's going out.
- List out all the debts you have, their payments and interest rates.
- Reasonable interest rates are somewhere near or below 6%.
- The Debt Snowball – take all your debts and organize them from smallest balance to largest. Continue making minimum payments for all debts, and commit any extra to paying off the smallest debt. When it's paid off, roll that payment into paying off the next smallest.
- - The Debt Snowball is a psychological win, but ignores interest rates.
- The Avalanche – the interest rate is the most important thing. Always pay toward the balance with the highest interest rate.
- The Hybrid Method – combine these two strategies to pay off a few smaller debts at first, then commit to paying toward the highest interest debt.
- You could earn more – start a side hustle, work a little extra
- A no-spend month
- Optimize regular monthly expenses
- A credit card balance transfer
- Consolidating debt
- Part 1: Know where to find your account information
- Part 2: Acknowledging that you can't afford debt.
- Part 3: Debt Payoff Strategy
- Part 4: Creating the Margin

For more information, visit the show notes at https://ChooseFI.com/115R