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Go on a Debt Diet

That will help you build momentum and see results more quickly, which will
give you the boost you need to keep going. Plan on committing 10 percent of
your gross income to this task. That may be too much for some of you, but
start with as much as you can. The point is to start. Now!

Now let’s walk through five steps to financial freedom, step by step:

1. Organize your debts . Organize all your debts in one pile, including
credit and charge cards, loans, mortgages, and any other debt.

2. Take inventory . Make a list of all your debts on a separate piece of paper.
You’ll need this information to calculate your debt elimination plan on
the worksheet that follows (Exhibit 8.1 ). List the name of the debt, the
total payoff balance, and the monthly payment. You’ll need this
information for the next step. Before we move on, let me add a word
of encouragement: Viewing your total debt can be depressing, but
don’t be discouraged—you’re doing something about your debt today.
You’re establishing a plan to get rid of your debt—forever. You’re

taking control of your financial future—right now.
3. Determine your pay-off ratio and pay-off priority . Now you need to fi gure

out which debt to pay off first, which is part of building a workable

Downloadable Exhibit 8.1 Debt Elimination Plan*
Line One: ______________________________________________________________
Debt Name (List to whom you owe the money):
Line Two: ______________________________________________________________
Total Balance (Fill in the current total balance owed):

Line Three: _____________________________________________________________
Monthly Payment (Fill in your current minimum monthly payment):
Line Four: _____________________________________________________________
Pay-Off Ratio. Divide the current total balance owed (Line Two) by the minimum
monthly payment (Line Three), and enter your answer on Line Four. This is your
payment-to-debt ratio for each debt.
Line Five: _____________________________________________________________
Pay-Off Priority. Start with the lowest ratio number from Line Four in deciding
which bill to pay off fi rst. The lower the ratio number, the higher the pay-off priority.
Number each one of your debts.
Source: Copyright: johnburley.com. For any other use, contact John Burley at johnburley.com.
*Note: A blank version of this exhibit can be downloaded from www.trumpuniversity.com/
wealthbuilding101 for your personal use.

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