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Getting out of debt is quite simple. There are three steps:
- Spend less.
- Earn more.
- 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.
- P – Perspective – Adopt a point of view that empowers you.
- O – Ownership – Own what is important to you.
- W – Wisdom – Identify your one or two next basic steps.
- E – Engagement – Commit to the implementation of those steps.
- R – Reward – Stay 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.
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.
O – Ownership – Own what is important to you.
“Many people live their entire lives, cradle to grave, in such an out-of-focus way. They fail to own the things that are vital to them.”
Ownership equals focus, Sheri writes. What’s important to you? Is it spending more time with family? Being financially independent? Being able to give your time and money to charities? Traveling?
So is your current debt-ridden lifestyle aligned with those values? If not, then it’s time to focus and reclaim what’s truly important to you. The values listed above are my own. I realize being in debt is no longer an option if I want to live according to those values.
Once you own your mistakes and your decision to get debt-free, then you’ll start trimming the fat. That gym membership you never use. The weekly pedicures! Adios! Savings will start looking sexy to you. And crossing off names from your debt snowball will give you high. Own your new lifestyle, own your values and you can finally own your money.
W – Wisdom – Identify your one or two next basic steps.
“The steps you choose to take flow from having a clear Perspective on where you want your life to be going next and Ownership of where you are right now. They are based on your overall vision for your life and on a true acceptance of your skills, talents, and values at this time in your life, as well as your authentic desires.”
Wisdom is knowing what you should do now versus later and when it’s time to ask for help, Sherri writes. It’s also about creating a plan for the most important next steps—not drafting a 10-year plan and getting so lost in the sauce that you fail to make any decisions and take action at all.
So, my fellow Debt Slayers, write down two to three things you can do right now to put you closer to debt freedom. For example, you might write “Learn to stick to a budget“, “Do a balance transfer” or “Negotiate a raise.” Think about who you should ask to help you and what skills or knowledge you must acquire to achieve that goal. And put a deadline on those steps to seal the deal. When you’ve completed those steps, then create a new, short list. Take it one step—and one debt—at a time.
E – Engagement – Commit to the implementation of those steps.
“You will face obstacles; the key is to not let those obstacles come as a shock to you. If you do, you will find yourself feeling defeated and disengaging from the process. On the other hand, if you mentally prepare for obstacles and have a plan in place for dealing with them, you’ll remain engaged.”
Here’s where the journey gets rough. You must accept that you will hit roadblocks. I’m not saying that you should expect all hell to break loose, but emergencies or temptations will arise. Engagement requires you to prepare ahead so you can take detours to get back on track.
For example, set aside at least $1,000 or one month’s worth of expenses before you start to aggressively pay off debt. Why? Tires get flat and unexpected bills pop up. If you don’t have savings, you risk going into debt again! Instead, use your savings to keep things afloat. Then refill that savings bucket again before resuming your debt payoff.
Fully commit to your debt-free journey. If you have to, draft a contract and sign it. Tell your closest friends about it to help keep you accountable. Avoid friends or email alerts that persuade you to spend on stuff you don’t need. The hard work will pay off—literally.
R – Reward – Stay consistently engaged with the process in order to experience the positive outcomes.
“It is essential, when tackling change, to have a specific, tangible, and satisfying reward in mind. Otherwise, you’ll run out of gas.”
We often hear “No risk. No reward.” Well, let’s flip it. “No reward. No risk.” If there’s no reward at the end of the race, then why the heck are you running and risking your neck to win?! Think with the end in mind.
Sherri writes that the key to getting to Reward, step five in the P.O.W.E.R. process, is consistency. And the key to consistency is recognizing your triggers. To consistently make healthy choices, you gotta keep those long-term rewards in mind and imagine the way your life will feel when you achieve those rewards.
More and more, I’ve been thinking about what it’ll be like to keep all of the money I send every month to Old Navy, Bank of America, etc. I think about the pride I’ll have in cash-flowing trips to Spain, Colombia and South Africa. I think about the freedom I’ll have from quitting a 9-to-5 long before I’m 59.5. I think about meeting my future husband and the relief in knowing I’m not carrying debt into our marriage. I think about the joy of teaching my kids how to be frugal and invest and paying for their college education.
What does financial freedom look like to you? Is putting those jeans or that trip on your credit card worth killing that dream? You gotta figure out how you’re going to beat those temptations before they show up.
For example, if you can’t stick to your budget because Target sales keep calling out to you, then change your route so you don’t drive past Target and unsubscribe to their emails.
“The key to staying consistent in your behavior is to recognize and acknowledge both your unhealthy and healthy triggers. Name them. Call them out. Look them in the eye. Knowing your unhealthy triggers prepares you for the challenges you will face. Knowing your healthy triggers tells you what weapon you can pull out when the demons are dancing.”
You can get out of debt and build wealth if you live in your P.O.W.E.R.
- Adopt a point of view that empowers you. (P – Perspective)
- Own what is important to you. (O – Ownership)
- Identify your one or two next basic steps. (W – Wisdom)
- Commit to the implementation of those steps. (E – Engagement)
- Stay consistently engaged with the process in order to experience the positive outcomes. (R – Reward)
Ask yourself these five P.O.W.ER.-ful questions to draft your Financial Freedom Plan:
- What is my vision? (P – Perspective)
- What problems am I facing right now?
- How can I change my perspective on those problems to see them as opportunities?
- How will I focus? (O – Ownership)
- What are my top five values?
- How can I spend more time and energy on those five pursuits?
- How can I align my goals and budget to those values?
- What is my plan? (W – Wisdom)
- What are the top three goals I want to achieve in the next year?
- What are the three things I can do in 90 days to get me closer to debt freedom?
- What’s the most important next step?
- What adjustments do I need to make? (E – Engagement)
- Who can help me or what knowledge do I need to execute my plan?
- Who can help hold me accountable for my choices?
- How will I stay consistent? (R – Reward)
- What rewards will I gain from embarking on this journey?
- What triggers keep me from staying consistent?
- How can I resist those temptations?
(NOTE: Sherri Riley sent Exponential Living to China after I mentioned on Instagram that I heard her interview on the His and Her Money Show. She did not, however, ask me to review her book in any capacity. This blog post was of my own doing.)