Wealth. Does that sound like a word you've never heard before? If you have a lot of consumer debt, like so many Americans do, you probably don't know what this word means. Commercial and personal debts are the biggest thing that keeps people from getting rich. And when you have tens of thousands of dollars in debt, it may seem impossible to get out.
The news is good! It's not impossible to get out of debt and start making money. Most people and small businesses don't have a plan for getting out of debt, so they keep making bad decisions and stay in debt. If you have the right system for managing your debt, you can get out of debt faster than you probably thought and with little change to your lifestyle.
On top of that, there is a system you can use to create and feed the Wealth Cycle. This is a cycle of wealth that millionaires use to build their wealth consistently and quickly. In other words, you can get rich and pay off your debts at the same time.
Skeptical? I bet you are. But you won't believe how simple this is.
So, what's the best way to stop people from getting into debt? Many financial experts will tell you to cut back on everything that makes life fun, save money, and spend less. They will tell you to make a very tight budget and pay off your debts before you can even think about investing in anything. Sounds a lot like a diet, one that will make you and your children starve and take away their money.
Then what works?
Loral's five-step plan to deal with consumer debt includes the following steps, which are described in great detail in her book The Millionaire Maker:
- Calculate a factoring number
- Create a debt elimination box
Make a payoff priority list.
- Use a jump start allocation
- Make your debt payments
When you use this system, your payments to your creditors, who are all listed in order of priority, start to add up. You'll be able to pay off your debt faster, but you'll have to cut back on some expenses. You don't have to give up everything you love, though. In short, it's true to life and works very well. You just have to decide to do it.
But hold on, there's more!
I've already said that you can pay off your debts and build your wealth at the same time. Remember when we talked about the Wealth Cycle? It comes into play here.
The 12 steps of the Wealth Cycle, which is used by millionaires, are:
- Freedom Day
- Financial Baseline
- Debt Management
- Cash Machine
- Gap Analysis
- Entities
Account of Wealth/li>
- Teamwork
- Leadership
- Assets
- Conditioning
Forecasting
You don't have to understand what each step means right now. The most important thing to know about the Wealth Cycle is that it works best when you know which steps to take and in what order.
Each person's finances will require a different order of steps. A wealth mentor can help you figure out what you should do. Some people's first step is to set up the right legal entities for their business and investments so they can get the most out of their tax strategies. For some, it could mean first.
You can start investing if you move your assets around so you can make more money each month. This will lead to passive income, which will help you pay off your debt faster.
Here's an example of when entity structuring might come first:
Let's say you do graphic design for a living, but you haven't incorporated your business. This means that a lot of your debt comes from things you bought with money from your own account, like a cell phone, office supplies, postage, etc. If you turn your design business into a legal entity, like a Subchapter S Corporation, the part of your debt that includes these things can now be counted as business costs. Now you can count that part of your debt against your income, which will give you more money at the end of the year.
As was said above, one interesting thing about the Wealth Cycle is that you don't worry about debt management until you have a Cash Machine, the right Entities, and a plan for the future. Getting rich when you have a lot of debt takes courage, discipline, and a good attitude. I know this may seem like a hard situation to build wealth from, but my hundreds of successful clients show that it is very possible to get out of debt and build wealth. You have to be willing to learn more about your mind and your money, and you have to be willing to give up old habits that aren't helping you.
