Reduce Your Debt

In keeping with my original objectives, I’ve decided to elaborate. I am putting some teeth, some specifics to each one in the next few posts, so that my goals can be documented and I can have something to look at and assess my progress.


The first area of The Producer Lifestyle on which I will focus is finance.

Here’s what I wrote as my objective:


I will be more productive in my finances by:

  • Reducing my debt
  • Increasing my wealth
  • Using my resources more effectively for good.


Just for general information, I’ve been blessed with a wonderful companion in life who knows how to make and stick to a budget, my wife. She is amazing at how she can tweak and fiddle with things to be sure to handle emergencies that come up so they don’t impact us too much. Granted, she’s like everyone else, dealing with limited income that may not increase dramatically from year to year, even when prices go up. But, she’s a wiz at budgeting. So, with that praise, I’ll say that we’re not in dire straights financially.


Yes, we live paycheck to paycheck. Yes, things are squeaky tight right now, and have been for a while. But, we’re making it work and we’ve made some smart decisions already. We don’t go into debt unless it is absolutely necessary and when we do, we get the absolute best deal on credit we can find, such as the credit card with no interest for eighteen months. We snowball our debt that we do have so we can get rid of each bill faster than just pay the minimum payment. We stick to our budget. We pay a 10% tithe first, because we need heaven’s help in all aspects of our lives.


That being said, we still have some things for which we are in debt. Would it have been better to have a savings to fall back on? Yes. But, like many of you, we haven’t done that. Lesson learned. Now, let’s get rid of some debt!


Reducing Debt

Sometimes we have to go into debt. Sometimes, we’ve done it stupidly in the past and we have to deal with those mistakes and learn. Other times, we’ve been smarter about it. Either way, if we have debt, we need to pay it off. That is at the heart of this objective. So, what are some good ways to reduce debt?


Debt Snowball

Hopefully, if you’re considering this objective in The Producer Lifestyle, you’ve already heard of the debt snowball. If not, here are the basics:

  1. List all of your debts with interest rates included. All debt creditors will receive the minimum payment, except the first snowball. The first snowball is whichever debt is smallest, or if there is a close tie—within a few hundred dollars—whichever has the higher interest rate. There are some who argue that in all cases the highest interest rate should be the first snowball, because it saves you from paying more interest in the long run. True. However, most people lack the financial stamina to see it through. You choose either the highest interest rate or lowest balance as your first snowball.
  2. Pay any extra money you have toward that first snowball payment, while all other creditors receive the minimum monthly payment. This helps in two ways. All creditors are satisfied with your payment. The little one, or the one that hurts you most in interest, is gone faster.
  3. Once the first snowball is paid off, do not go on a shopping spree! No. The point is to exert some discipline, take the money you have already budgeted for that first one, and pay it toward the next snowball—next smallest debt or next highest interest.


For example, if my mortgage payment was $90,000 with payments of $800 at 5%, my car was $4500 with payments of $300 at 2%, and my credit card was $7000 with payments of $100 at 18%, I would start either with the car payment or credit card as my first snowball. Personally, I would choose the credit card because that interest rate would scare me to death versus the slower-building car loan. I would try to double, triple, or super-lump-pay that credit card until it were gone! Next, add the $100 budgeted for the credit card I just paid off, and any extra to the car loan for $400 total each month, even though the interest rate is less than half that of the mortgage. After the car is paid off, the mortgage gets $100 from the credit card, $300 from the car payment, $800 for the mortgage, for $1200 plus any extra that gets freed up. As you see, it gives the full mortgage payment an additional half payment each month paid directly to the principal. The best way to reduce a mortgage or any loan is to pay on the principal as much as possible to reduce the amount from which the interest draws.


That’s great. But, how do we get to the point where we can get some of that “extra money” to throw at the snowball anyway?


Consume Less

One way to get extra money for your debt snowball is to consume less. Since The Producer Lifestyle is all about consuming less, I hope you’ll at least consider following this one. First, take a look at your budget to see if there is anything for which you are paying but don’t absolutely need.


For me, a recent expense that I dropped was my cell phone. Yeah, I could use it to check in on people and it was handy for them to reach me, but I didn’t absolutely need it. I’m usually near a phone of some sort anyway, except when I’m driving. If there were an emergency, the phone still works to call 911. I keep it charged just in case. Besides, there is an added benefit of time to think and plan my day or reflect as I drive without any distractions from a phone going off.


For you it may be cable or satellite television. If you are already thinking about how you can maximize your time to produce something of value, or reduce the amount of time you sit consuming television, this is a logical next step with great benefits to your family time and your budget.


Look at how much you actually spend each month eating out. Could you save money and eat healthier if you packed your own lunch? Could you spend time with a spouse or child discussing your upcoming day as you prepare a lunch together? See? The Producer Lifestyle is a complete change, doing new things that can help you be better in many areas of your life. Who knows, you may save money, some sanity, and build better relationships at the same time.


Earn More

Obviously, if you earn more money, you should have more into your budget. Just a word of caution: Try to earn more without adding too much extra burden on your family. An extra job that doesn’t cover the transportation or child-care expenses that would be added is a net loss to the budget.


Also, don’t forget that sometimes more earnings influence the tax burden you would face. Plan ahead. Ask yourself or your tax professional those questions and then decide if it would be worth the burden.


Then there are those other things that can be done for a little extra cash. Are you physically able to and near a place that pays for donations of blood plasma? Some plasma centers pay over $200 per month for your twice-a-week donations. How would that help your first snowball debt?


Some places pay for recycled aluminum cans or glass bottles, do you drink a lot of beer, soda, or energy drinks? Save those things up and cash in instead of throwing out. It also helps the environment.


Sell things you don’t need online through craigslist or ebay. Offer a gig on fiverr that you could easily replicate. Start a small business making something for others.



This is the next logical step in The Producer Lifestyle. The name implies we should be producing something of benefit. You could be like my friend Mikey, creating videos on YouTube or selling a product on a website. Look to your hobbies. I know of countless folks who started a hobby as a woodworker who are building projects for sale to augment their nine-to-five jobs.


Let’s say you can build beautiful picture frames from wood pallets and sell them for $10 profit each. If you only made and sold one per week on a Wednesday night when you weren’t doing anything else that would be $40 per month going to the budget. What would and additional $40 do to your first snowball debt?



I add this because some folks don’t think about consolidating debt as a way to free up money for the budget. There are debt consolidation place that will reduce your debt payments and consolidate them all into one payment. However, be careful, and ask around before signing any contracts or agreements. You may end up paying more if you are not careful.


You may try to consolidate by the do-it-yourself method. In my snowball debt example, let’s say I was able to find a new credit card company that offered a low one-time fee for balance transfer, but a 0% introductory rate. I could consolidate that previous credit card into the new one and have another couple of months or a year before the interest rate jumps back up to the higher rate. Doing that may, but not always, reduce my total interest enough to make the snowball roll a little faster. Again, talk to a financial advisor to see what is the best way to consolidate your own debt.


Get Started Now

Your assignment, if you want to call it that, is to go ahead and start your budget. Figure out what you have coming in, what you need to spend, and what debts you owe. Plan your snowball and attack it. You’ll need determination and patience, but it is possible. After all, you are changing your life. Welcome to The Producer Lifestyle. Next time we’ll discuss building wealth.

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