Opinion: Down with debt: Follow a system

I signed up for the Basic Spanish course at www.bilingual

america.com. I received a workbook, flash cards and a half-dozen CD’s, and was introduced via e-mail to my tutor, Raelys.

And I am loving it! The hardest part in the process: following directions.

You see, the course is nicely structured and proven to work – if you follow the directions. If you are asked to go through the flash cards 10 times, do that. And then sign off that you have done that in the workbook. Easy! … Right?

Every time I approach my practice, I want to improvise. I want to NOT follow instructions. I want to rise up and revolt and do things my way.

Why do we fight what we know to be right? It has been a challenge to stay focused.

As a consultant, I encounter resistance to solid advice. “Do THIS,” I suggest, “and you can make more money.” Most of my clients take the advice and they make more money. They pay down debt. They build wealth.

Some don’t. I can relate to the rebels. I, too, hate having to do something … even when I know it is the right thing to do!

Do you struggle under the mounting pressure of debt, personally and/or in your business?

You are not alone. The statistics on debt are troubling:

The average American household has 13 payment cards (credit cards, loan payments and store cards.)

Americans carry, on average, $8,000 in credit card debt from month to month. If you were to make only the minimum monthly payment on that debt, at 18 percent interest, it would take 25 years to pay off and cost you more than $24,000.

Forty-six percent of all Americans have less than $10,000 saved for their retirement.

Ninety-six percent of all Americans will retire financially dependent on the government, family or charity.

Only 2 percent of all homes in America are paid for.

I got these statistics from a Web site offering debt consolidation services. Unfortunately, most folks misunderstand and misuse these services … and get further into debt. These debt consolidation services can be creditors in disguise.

Here’s the good news. You can get out of debt. It’s easy to do – IF you follow this system exactly.

Step 1: Get to a KFP – Known Financial Position. Clean up your business balance sheet. Create a personal, family balance sheet. Have your Bean Team help you. The section called liabilities is what you owe; it’s your total debt. Once you know, you can start bringing that number down.

Step 2: Start selling at the right price. Include debt reduction dollars in your budget. Your customers will have to assume some of the burden of your debt in order for you to create dollars to pay it off. In your selling price, include enough salary to contribute to paying off your personal debt and enough profit to pay down your company debt.

Step 3: Stop buying stuff on credit. A recent episode of “Saturday Night Live” had a spoof of a TV commercial for a new debt-reduction book called, “Quit Buying Stuff You Can’t Pay For.”

Step 4: Read “The Richest Man in Babylon,” by George Clason. This slim book uses a story to teach the basics about reducing debt and increasing your wealth. This timeless classic was written during the Depression and offers spot-on advice for today. Set up a payment schedule as suggested in the story and hold yourself accountable for following through with the next few steps.

Step 5: Talk to your creditors. You may be able to work out a better interest rate or payment schedule. Your creditors don’t want you to declare bankruptcy.

Step 6: Start saving. A little bit every month adds up. George Clason suggests 10 percent.

Step 7: Systematically pay down debt. This is the easy/hard part. It is easy to do it. The problem is it is easier NOT to do it.

You can do this. It’s very easy: “Muy facil!”

Ellen Rohr is an author and business consultant who offers systems for getting focused and organized, making money and having fun in business. Her latest book is “The Bare Bones Biz Plan.” She can be reached at ellen@barebonesbiz.com.