Five Key Elements Of Debt Management | How To Get Out Of Debt And Gain Financial Freedom

(upbeat music) - Hi, Peter Boolkah here, and welcome to today's edition of the Transition Guy. Now, today, I want to talk to you about paying off debt, and that is a topic that seems to be coming up time and time again, and I have a lot of people reaching out to me and saying, well, I'm so badly in debt. I don't know what to do. So I put together a five stage plan on how you can get rid of debt, and really, it starts at number one. You see, debt is all about your relationship with money. It is your mindset about money, and the question you gotta ask yourself from a mindset perspective, do you have a saver's mindset or a spender mindset? And they're two really different ways of thinking. Savers are people that will think about, okay, I'm gonna put this away, that away.

They're very much cautious people. They're saving for tomorrow at the expense of some of today, whereas spenders, they're quite happy to say, well, I want to go on holiday. I don't have the money, yet I'll put it on the credit card and think about it later. Yeah, saver mindset is thinking about later at the expense of today, and a spender mindset is thinking about today at the expense of the future, and you gotta work out which one are you? Because that will determine how you handle things, and really, in order for you to reduce debt, if you've got the spender mindset, you need to shift that. You need to get some help into creating a saver mindset, otherwise your old habits may be the habits that have actually got you in trouble in the first place and if you continue having those same habits and that same relationship with money, you're gonna go through the vicious circle and always end up where you've been.

Number two, discipline. In order to get rid of debt, you have to be massively disciplined. Are you an impulsive person or a measured person? The impulsive person is that person that sees something and they want to have it, they'll go and buy it. They won't think about whether they can afford it or not, they go out there and they get it, whereas the measured person, they're gonna be thinking, okay, I want it, how am I gonna get it? Or more importantly, can I afford it and how can I afford it? Now, I know that there's gonna be some people out there that are in the poverty trap and they're constantly trying to find money and they can't seem to get out of it, but I'll give you some tactics on that a little bit later. Number three, value set. Are you exchanging time for money? So a lot of people say, yeah, but it's okay, I've got a job, so what am I supposed to do? I get paid this much an hour, I get this much a week, and that's what I have to live off.

No, it's not what you have to live off, it's what you choose to live off. Yes, you may have to live off of that for now, but the question's gonna be do you have to live off that forever? No, but that requires change on your side. How do you go from exchanging time for money to exchanging value for money? So one of the things was I used to work for McDonald's, and I started off on something really pitiful.

I think it was £1.30 an hour, and back then, they had different wage brackets for different age groups. You could've done the same job, but if you're under 18, you got massively paid less. Well, for two years, I could either bitch and moan about, well, that's my end and I'm gonna have to just work on the really bare minimum wage or I could do something about it, and in McDonald's, you had the opportunity of the more you learn, the more you earn. So the better you became, the more useful you became, whether you learnt all the different stations, then each time you sort of become more trained, you got a pay raise. Okay, and at the time, it may have only been five pence an hour, but by the time you did all the modules, that ended up being quite a lot of money per hour, and then when you said, well, every time you sort of took the decision, I want to step up, I want to sort of learn, and I want to sort of move up in the organization, take on additional responsibilities, that also came with money.

So that is the whole exchanging your value. It's saying, okay, do you know what? I'm gonna make myself more valuable to the organization because if I do that, then I can earn more money, and the interesting thing is, yes, McDonald's provided training, et cetera, and they did all of that and that was great. I did a lot of the education on my own time, and that was interesting. As a 16-year-old, I took stuff home and learnt it because the quicker I took this stuff on board, the quicker I would move up.

Number four, it's all about budgets. Are you actually budgeting your life? Now, I run very strict personal budgets. I know what's coming in, I know what's going out. I know what my affordability is. Okay, as a 16, 17-year-old, I didn't know that, and a lot of the bad habits, I mean, I got into debt as a youngster because I never had the disciplines or the mindset of paying off debt. I just accumulated debt. Probably one of the biggest challenges I had was that I got a credit card quite young, and that relationship with that credit card was interesting.

I seemed to be spending, spending, spending, and then the debt would rise, would rise, would rise, and before you know it, it can be quite out of control and can be quite daunting, to say the least. So you need to budget, you need to understand your numbers. You need to be brutally honest, where do you stand with that right now? What are the brutal facts? And more importantly, then what are you gonna do? If you got higher credit card debts, then you pay off the credit card with the highest interest rate first. You look at doing a balance transfer if you can get access to 0% credit cards. You do those little things to start shifting it. You start looking at your utilities. Can I move my utilities over? One of my favorite, it wasn't at the time, but one of my favorite exercises is on your mortgage statement, look at your annual mortgage statement and look at how much interest you are paying per year for where you live.

Then think about it and say, well, over the entire life span of a mortgage, how much interest are you gonna be paying? And then start thinking if you had a saver mindset, and I don't mean saving money in the bank, but if you had the saver mindset where you started to pay off a little bit overpayments on your mortgage, how much interest do you think would save over a period of time? Do the exercise. It's frightening, and finally, I know that a lot of you have got a job, you're working hard, and you perhaps say, well, I've got nothing else. I can't do anything else. I'm just at my max.

I want you start thinking, what does your side hustle look like? How can you earn money for yourself on the side? And I don't mean going and getting a third or fourth job for somebody else. What do you need to learn so that you can add value to yourself so that you can start earning for yourself? We're in a beautiful age where we can do side hustles.

You just need to work out what your gift is, what your side hustle can be, and how you can earn more. Now, we can go into far more detail on this. We don't really have the time in this episode, but if you want any more information around how you can start paying off your debt, how you can start adding more value to your skillset so you can earn more because you're adding more value to organizations and you work around your mindset, head over to and get in touch, and if you loved today's episode, please like it, subscribe, and share it so that others can benefit also, and finally, always remember that failing to learn is learning to fail and please stay safe.

(calm music).

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