How to Get Out of Debt with Sheri Riley’s P.O.W.E.R. Process

Getting out of debt is quite simple. There are three steps:

  1. Spend less.
  2. Earn more.
  3. Pay off debt with the difference.

Simple, but not easy. Debt slayers are acutely aware of this. If it were all about the  numbers, then everyone would be debt-free in a heartbeat. But the debt-free journey also calls on you to fix your mindset and find strength, courage and creativity you probably didn’t think you had.

Sheri Riley’s awesome book Exponential Living: Stop Spending 100% of Your Time on 10% of Who You Are lays out a solid process for setting yourself up to achieve any monumental task. She calls on you to live in your P.O.W.E.R.

  1. P – PerspectiveAdopt a point of view that empowers you.
  2. O – OwnershipOwn what is important to you.
  3. W – WisdomIdentify your one or two next basic steps.
  4. E – EngagementCommit to the implementation of those steps.
  5. R – RewardStay consistently engaged with the process in order to experience the positive outcomes.

Let me explain how to use your P.O.W.E.R. to slay debt.

P – Perspective – Adopt a point of view that empowers you.

If you want to make a change in your life or respond effectively to a challenge, the way you look at the situation—your perspective—is critical.

Sheri writes that if you see the situation as an opportunity or chance to elevate your game instead of a crushing blow or bad luck, then you’re halfway to a positive resolution. I believe her.

On a podcast, a journalist who eliminated over $100,000 of debt in two years said he stopped thinking of his debts as burdens. Instead, they became targets. Then he set his sights on getting rid of the first one on his list. And then the next one. And then the next one. I had started using that tactic, too. Each line in my debt snowball has a name, for example, Operation: I’m So Over Undergrad Loans and Operation: Old Navy is Old News (a credit card). Those names make me feel empowered. It’s like I’m a soldier on a mission, no longer the prey.

How do you view your debt and your current circumstances? It’s easy to feel down on yourself. Being $40,00, $50,000 or $100,000 in debt is no fun at all. But if your perspective is “I’ll always have debt,” well, chances are you’ll always have debt.

Forgive yourself for your past money mistakes. Shed limiting beliefs—yours and those you’ve adopted from family, friends and society. And instead of spewing negativity into the universe, speak positively about where you want to be and how you’ll get there. Say “I’m going to be debt-free. Wealth is mine!” That’s the self-fulfilling prophecy you want to manifest.

Get Out of Debt with the POWER Process

Click to read more about the P.O.W.E.R. process.

Advertisements

9 Reasons Why Your Budget Sucks + How to Fix It

Budgets are bae! There is no way I could crush debt without them. Once I tossed out the negative connotation of a budget and actually put one in place, my debt payoff kicked into high gear. Through practice, I’ve learned that you can’t just slap numbers on a spreadsheet and go on about your day. You have to craft each month’s budget with care. If you can’t stick to your budget, see if any of these pain points hit home and try out the solutions to relieve the stress.

1. It’s not tailor-made for you.

Ladies, think of how you feel wearing that dress that fits every curve the right way. That dress that makes your ass look fabulous. Yeah, that one! You never get tired of it.

Well, that’s how your budget should feel. It should fit just right for you—not Suze Orman, not your mama, not that boss lady you follow on Instagram. These folks may offer you great tips and tools, but you have to use this budget, so make sure it’s your own.

Solution: Find a style that fits you and include budget lines you’d actually track.

There’s a variety of budgeting styles:

  • the anti-budget
  • the zero-sum budget
  • the 50-30-20 budget

The budgets that look like spreadsheets on steroids give me the hives. I’m not gonna use a line item for “hair accessories.” That’s too granular, and I hate being micro-managed.

I like the anti-budget because you simply subtract savings, giving and essential expenses from your take-home pay. What’s leftover, a.k.a. the monthly nut, is yours to spend on whatever you want (hair accessories). And you don’t have to track every penny because you know bills, savings and giving are already taking care of. When that leftover money runs out, it just runs out. But that’s too loosey-goosy for me. I need a few more categories to track my spending.

I use a hybrid that allows me to track the details I want to track and nothing more. A line-item like “hair accessories” just goes into a bucket called “Entertainment and Everything Else.” It works for me. Find what works for you.

2. It’s not aligned with your values and goals.

Heck! You may not even have values and goals. We probably all have budgets we created a few years ago that never quite stuck. Why didn’t it work out? Maybe it’s because you didn’t have a strong enough reason or vision to stick to the plan. Start with your values and the rest will fall into place.

Solution: Find your why and budget according to your goals.

For example,

  • Values: Independence and giving to others.
  • Goal: Slay credit card debt of $5,000 by December 1, 2018.
  • Budget: Allot $100 more than my minimum payment for my debt snowball each month.

Values. Goals. Budget. I can’t be independent and generous if I’m constantly giving my money to a credit card company. Therefore, my immediate goal is to eliminate credit card debt. I make sure that’s reflected in my budget each month so that money doesn’t go to shoes or restaurants—things I don’t really value. I can stick to a budget when I see the bigger picture. I can stick to it when I keep my values in mind and see, feel and smell what it will be like to live those values out loud.

“Without values, goals are rarely accomplished,” said The Automatic Millionaire author David Bach. “Values are key. When you understand them correctly, they will pull you toward your dreams—which is a lot better than having to push yourself.”

9 Reasons Your Budget Sucks and How to Fix It

Learn how to fix 7 other budget problems.

Wise Woman Wallet Featured on the Clever Girls Know Podcast

Another incredible thing happened recently. Bola of Clever Girl Finance hit up my DMs on Instagram and asked if I could tape an episode of her “Clever Girls Know” podcast. She wanted to talk about my stint in her 6-month accountability program.

I said “YESSS!!!”, of course.

Bola’s one of my sheroes and money mentors. I stumbled across her Instagram feed about two years ago and got hooked. It was an honor and pleasure to talk to her via Skype.

She called at 10 p.m. my time, 10 a.m. her time. Bola noted that it was the first time we had actually had a real-time conversation. I couldn’t believe it!

It was as if I already knew her. Her voice is so familiar becuase of all of the webinars, live calls and podcasts I’d listened to. Plus, she’s so easygoing and relatable.

I had just gotten home when she called. I told her I was tired and asked her to excuse me if I broke out into song due to deliriumm. She giggled.

Bold told me what she planned to ask during the recording and tested the audio. Then we got started. I could have gone on and on. I’m fired up about my debt-free journey, and Bola’s the cheerleader rooting me on. It was a great convo. We talked about the limiting beliefs I’d learned growing up and my plan to change my family legacy.

It was 11 p.m. when we finished. She thanked me for joining. I thanked her for the invitation. She said she didn’t want to keep me up any longer. I joked that I’d probably sit on my futon and watch another movie with Clint Eastwood or Robert Redford. She laughed as I explained that I’d developed a strange propensity for watching films with handsome, old men. LOL! But I digress.

This was my first interview about my debt-free journey. I hope I can continue to share tips and give encouragement through other outlets.

Bola and I hope this episode with inspire others to take more control of their finances and kick debt to the curb. Check out the interview below.

What did you think of the podcast? Tell me what you took away from the conversation, and subscribe to “Clever Girls Know” if you haven’t already!

2017 Mid-Year Reflections

We made it halfway, folks! It still amazes me how time flies at warp speed. And with each minute, I hope I’m getting wiser, better and closer to my goals. Unlike other years, I locked my mind into this debt-free journey for the long haul. My 2017 goals reflect that decision. Check out what I’ve accomplished so far and read the BIG NEWS about what’s coming up in the fall.

How have I done with my 2017 goals so far?

The goals include:

  1. Saving $1,000
  2. Paying off my Chase credit card
  3. Paying off two of four parts of my undergrad student loan group
  4. Reading 12 books
  5. Visiting Thailand
  6. Visiting family and friends back in the U.S.

So far, I’ve checked off four out of six goals! Crazy! These were stretch goals in December because I wasn’t sure of my cash flow. I’ve got to think bigger next year.

  1. Saving $1,000. I completed this task shortly after getting my tax refund in February.
  2. Paying off my Chase credit card. I made four payments in May to wipe out the remaining $825.31 balance I had on May 1.
  3. Paying off two of four parts of my undergrad student loan group. These two small debts were knocked out in the first quarter.
  4. Reading 12 books. How about reading 16 books? Yeah. I devoured 16 books thanks to my long commute and my appetite for self-improvement. And my goodness, I’ve learned so much!
  5. Visiting Thailand. That’s still on the docket. Right now, I’m eyeing a Christmas getaway. I told myself, however, that I wouldn’t take an international trip until I’d paid off my credit card debt. I must pay off about $4,300 to stay true to myself.
  6. Visiting family and friends back in the U.S. This goal may be pushed back to February when I’ll have a month off for the Chinese New Year.

I also paid off two medical bills in the first half. Overall, I paid off $2,926 in debt. Not bad for a teacher on a low income! AND THERE’S MORE!

2017 Mid-Year Reflections

Find out what else happened.

Second Quarter 2017 Reflections

Reflection helps you know what habits to keep and kick to the curb. So here I am, reflecting on my second-quarter goals:

  1. Paying off the Chase credit card.
  2. Sticking to cash envelopes.
  3. Blogging every week.
  4. Reading 9 more books.
  5. Finishing the CFG accountability program. And finishing strong!

How did I do?

1. Paying off the Chase credit card. This was a smashing success! Chase is gone, baby, gone!

  • On May 1, I had a balance of $812.89.
  • On May 3, I decided to devote a ton of side hustle money and money I’d saved for a trip to make an extra $285 payment.
  • On May 23, I made a $210 payment thanks to a direct deposit from another side hustle.
  • On May 31, I used a chunk of my paycheck to pay off the remaining $329.06.

It was such a relief to get rid of that 24.24% interest rate from a $1,000 cash advance I took out in September 2016. It helped pay for my China move. This money also helped me pay off about $500 I owed CarMax when I sold my 2013 Hyundai Accent back to them. Less than 12 hours after selling the car at CarMax, I was on the plane. Crazy!

Second Quarter 2017 Reflections - Wise Woman Wallet.png

Keep on reading!

Four Times You Should Pause the Debt Snowball

I wanna keep rollin’ on the river like Proud Mary, but I might have to let the debt snowball chill a little. And that’s perfectly fine. Really, it is.

We can get tunnel vision when focusing on a goal, but life happens and we must reconsider where we put our energy and our money. Sometimes it’s better to save it than pay off more debt.

Here are four times it’s OK to pause your debt snowball.

1. You dipped into your savings.

This is probably the most obvious reason, right? You get a flat tire (or two) and use your baby savings to cover it. To replenish the coffers, press “Pause” and put any extra money back into the fund for the next snafu. Because we know it’s not a matter of ‘if’ one will arise. It’s ‘when.’

2. You have a major life event on the horizon.

Surgeries, moves and births cost a whole lotta money. To avoid huge charges on a credit card, press pause on the debt snowball to shore up some cash. You’ll feel much better saving to spend than becoming further indebted.

Times You Should Pause Your Debt Snowball

3. You’re not sure of your next move.

Maybe just pause for one month to try to figure out the next step. You’ll want cash on hand if you have to move or pay for a certification for a better job. If you give all of your money to your Visa, guess where you’ll go when you have no savings and you need money again. That’s right! Visa. If you feel more stable after a month or two, then throw that extra savings back into the debt to start the snowball again.

4. You want to eliminate debt with the highest interest instead of the lowest balance.

Your debt snowball is supposed to roll from the smallest balance into the next. Well, what if two balances are nearly the same, but have different interest rates. That $623 student loan incurs only 1.9% interest each month. But that Chase Card’s gotchu for 24.24% interest each month. That balance is $825. The student loans accruing about $0.40 of interest each month. Chase’s accruing nearly $20, and you’re only making $30 minimum payments. That hustling backwards.

This was my predicament on May 1. I wanted to get rid of that credit card for the emotional win and peace of mind. And guess what! I paid it off on May 31—in just one month! Switching from the debt snowball to the debt avalanche paid off big time! Now, that student loan is in the crosshairs.

Have you ever paused your debt snowball? Why and how’d you decide to do it? Please leave your thoughts below.

Non-Monetary Benefits of No-Spend Challenges

Often, people go into no-spend challenges, spending freezes or financial fasts just thinking about the money they’ll save. That’s definitely a huge component, but I’ve grown to love hitting the reset button on spending every so often because of these perks that don’t directly deal with money.

  1. Spending “shopping time” on other things—more important things. Money and time seem to multiply when you don’t shop.
  2. Greater appreciation of the little things. Free candy from a coworker or spending more time with family instead of at sales could make you ridiculously grateful when your wallet’s closed.
  3. Better differentiation between needs and wants. This is key for slaying debt. You gotta spend on things you truly need and value.
  4. Looser jeans. Eating home-cooked meals and rationing out meals to last a whole week (or however long you choose) can reduce your waistline.
  5. More self-control. That discipline muscle will get a workout. You’ll get better at telling yourself “No” and maybe get more strict with portion sizes to stretch meals.
  6. Cleaner pantry. It’s wise to use up what’s in your fridge and cabinets instead of wasting food, buying more groceries or eating out.
  7. More creativity. When you clear out your pantry, you end up mixing odd ingredients in stir fries or eating breakfast for dinner to use up your pancake mix.
  8. Less clutter. You have less stuff when you buy less stuff. Easier said than done sometimes, right?

Am I missing anything? What perks have you gotten from completing a no-spend challenge? Leave your comment below.