- Welcome to another episode of
The Rachel Cruze Show at home.
Guys,
debt is a topic I talk about
all the time.
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Let's talk about, how do you get outta debt,
paying off debt, student loan debt,
credit card debt, debt, debt, debt, debt.
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Hopefully you're not sick of me talking about it.
But this is an important subject in your life
for you to know about.
So, in this video, we're goin' to talk about
how to figure out how much debt you actually have.
During the pandemic, I just feel like people
had this realization about their finances,
whether they feel like they were unstable.
Whether they realized, oh, wow,
we have more bills than I even realize.
Oh, wow, we have more money going out
than I even thought was possible,
but I'm seeing it now
because we're actually looking at our income.
And you're just being more diligent
because of the crisis that we're in
around the world.
So, when it comes to paying off debt,
the first step you have to take is to figure out
how much debt you actually have.
Now, debt can be a confusing term
in our world today because it is so common.
It is so normal.
People almost just forget what debt is.
For the sake of this video,
let's just get on the same page, okay?
Debt is owing anything to anyone for any reason.
That is debt.
So, when you look to say, okay, I'm gonna start
paying off my debt. That's what we teach.
And we teach the debt snowball.
That's where you list out all of your debts
smallest to largest, regardless of the interest rate,
paying minimum payments on everything,
and you attack the smallest one first.
You might be saying, oh, that's great, Rachel,
but I don't even really know
where I am financially.
I don't even know how much debt I have.
The first thing I want you to do is figure out
how much debt you have that is non-mortgage.
Because when we're doing the debt snowball,
I'm not expecting you to be
paying off your house during this time.
That's in Baby Step 6,
so you will get there eventually
and be completely debt-free, even a mortgage.
It's amazing, so get ready for that.
But when it comes to the Baby Steps,
it's non-mortgage debt.
This is going to be credit cards.
Yes, credit cards are debt,
even if you pay it off every month.
But actually, more than half of Americans don't,
so I'm talking to you people.
Actually, all of you with credit cards,
again, it's debt. Count it. Count it.
Get it out of your life.
Credit cards.
Car loans.
Yes, that beautiful car you have in the driveway
that you always dreamed about,
that is debt if you have a payment on it.
And student loans.
Oh, Sallie Mae.
You know, she just seems to stick around a long time,
so she's counted in the list.
Even things like a HELOC,
maybe even if you have a second mortgage,
any other debt, a personal loan,
if you owe money to a family member,
any other debt besides your primary residence,
then that is going to be considered
debt in the debt snowball.
Then, I want you to look to see
how much cash do you have
that is liquid that you can get to.
This basically means anything but retirement.
I do not want you touching your retirement
to pay off debt.
The only reason you would cash out
a Roth IRA or your 401(k)
is to avoid a foreclosure or a bankruptcy.
Other than that, do not use it to pay off debt.
I was talking to a guy yesterday,
and he has $90,000 in his 401(k),
and he has like $17,000 of debt. And he was like,
I kind of just wanna pay the penalties
and the taxes and cash out some of that early
just to get rid of the debt.
And I'm like, no.
You can sacrifice your lifestyle
for a short period of time, get out of debt,
and not even have to touch your retirement.
So, do not touch your retirement.
But if you have money in a money market account,
maybe just a traditional savings account, a CD,
your checking account,
any money you have that you can get to,
I want you to figure that out and see, okay,
how much money do we actually have.
For some people, it might be a good amount
that you can throw toward that debt
and start knocking off the debt snowball.
For some of you, you may be like,
yeah, we're basically paycheck to paycheck.
And hey, that's okay.
No matter where you are financially,
you can still pay off that debt.
But that's gonna be key to figure out
how much money you have liquid,
anything outside of retirement.
So, that's it.
That's how you start paying off debt
and figuring out how much debt you have.
Then you can also go look up your credit report.
You can do this at TransUnion
or equifax.com for free.
You can do this once a year.
So you can pull your credit report
and make sure you have everything.
Because sometimes there are debts
that you totally forgot about,
whether it was a medical debt or something else.
So, make sure you get that covered,
and you can start the process of becoming debt-free.
To help with that, you can sign up
for a 14-day free trial of Ramsey+.
This is our membership where you can go in
and watch all of our videos, all of our classes,
when it comes to your money,
to really get debt out of your life.
I mean, we're gonna show you the how, the what,
the why, all of it, because debt
doesn't just steal your income.
It steals your sleep at night.
It steals your peace of mind, people.
So, let's get it out of your life forever.
Make sure to check that out and sign up today.
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