If you don’t know Marcus Garret (no, not the NBA player), he is an audit manager and a podcast show host in the field of personal finance. Before these, he was such a BIG spender that he raked up to $30,000 in debt!
He could have called for bankruptcy, but decided instead to dig himself out of debt. And today, you’ll learn his 4-step plan to dig yourself out of debt!
Let’s be clear that bankruptcy is not something to avoid of. It can be your saving grace if you’re nowhere to run. But if you sense that you still have the means and just don’t know what to do, maybe Garret’s 4-step plan is your way out!
By the way, if you want to know if you qualify for bankruptcy, take our bankruptcy test by clicking that orange button above!
So, let’s just get right into it!
His 4-step plan can be abbreviated as DEBT.
D – Define the problem
E – Establish a plan
B – Build a budget
T – Trust the process
D – Define the problem
Assess and pinpoint exactly what is your financial problem. Words like “I’m drowning in debt” or “I need more money!” isn’t helpful because it doesn’t tell anything other than vague claims.
Pinpoint your problems as clearly as possible. Something like:
- I owe $15,000 to my friend.
- I need $2,500 to be able to pay my remaining debts.
- I lost my job, so I don’t know where to find the money I need to pay my debts.
It will also be great if you identify what led you to that debt in the first place. Is that overspending? Is that buying too much Sale that, ironically, led you to debts? Is that because you lack budget? In the case of Marcus Garret, it’s because he was once a mindless spender – not realizing he’s raking a lot of debt because of his bad financial habits. What’s yours?
E – Establish a plan
Now that you know your problem/s, it’s time to establish a plan. Of course, your plan of action will depend on your problems and the means you currently have in your hand right now.
For one, you will need a budget (which we will further discuss later). You will also need to consider cost reduction or downsizing your lifestyle, adding extra income, or better yet, both.
Just as you need to be clear with your problem, you should also need to be clear with your solution. Otherwise, you will be lost!
For example, if you owe $15,000 to your friend, and you earn $4,000, create a computation of your current expenses and see how much you can reduce to allot to your debt payment. Let’s say you’ve decided to allot $500 per month as payment (assuming it’s agreed between you and your friend), you may want to consider adding an extra income like taking side jobs to help you pay your debt faster.
That’s the example, but the point is to be specific – it helps in actually seeing the problem and the solution you need to take!
B – Build a budget
Perhaps the central part of your plan of action is your budget. Here’s one thing you should learn about the budget: According to Marcus Garret, don’t be afraid of the word “budget”. Take it as a tool that will set you free from your financial burden, rather than as a restrcitive element in your lifestyle.
Build a budget, but more importantly, stick to it!
And apply our Specifics rule: be specific in your budget as well. Of course you don’t just say, “I’ll allot a tiny portion of my income to paying my debts”. That clearly doesn’t tell anything! Lay out the numbers, and follow the plan.
T – Trust the process
It’s easy to overthink if you’ll make it or not. But trust the process. You’ll never know if your plan will work or not if you don’t even move with it.
And remember, should all else fail, you can always adjust, make changes and work on until you successfully dig yourself out of debt.
And although we never considered bankruptcy here, when the big scheme of things really fails, you can use bankruptcy as your last resort! Be sure to find a great bankruptcy lawyer to help you!
Be sure to take our test to see if you qualify for bankruptcy! Click the orange button above!