As a consultant, I sometimes encounter resistance to solid advice. "Do this," I suggest, "and you can make more money." Most of my clients take the advice, and the proof is in the pudding.

As a consultant, I sometimes encounter resistance to solid advice. "Dothis," I suggest, "and you can make more money." Most of my clients take the advice, and the proof is in the pudding. They make more money. They pay down debt. They build wealth. Some don't follow my advice. I can relate to the rebels. I, too, hate having to do something - even when I know it is the right thing to do!

One of the biggest challenges I encounter is the suffocating burden of debt. Money buys options. Debt eliminates options. Do you struggle under the mounting pressure of debt, personally and/or in your business? If so, you are not alone. The statistics on debt are troubling:
  • The average American household has 13 payment cards (including credit cards, loan payments and store cards).
  • Americans carry, on average, $8,000 in credit card debt from month to month. If only the minimum payment was made each month on that debt, at 18 percent interest it would take 25 years to pay off and cost more than $24,000 in principal and interest.
  • 46 percent of all Americans have less than $10,000 saved for their retirement.
  • 96 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 in full.

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 services can be creditors in disguise.

Seven Steps

Here's the good news. You can get out of debt. It's easy to do, if you follow this system exactly.

Step One: Get to a Known Financial Position (KFP).Clean up your business balance sheet. Create a personal, family balance sheet. Have your Bean Team help you, or give me a call. The section called liabilities is what you owe; it's your total debt. Once you know, you can start bringing that number down. I know it's scary. However, knowing is better than not knowing. You can always improve the situation if you are willing to confront it.

Step Two: 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. Include in your selling price enough salary to contribute to paying off your personal debt and enough profit to pay down your company debt. Much of the debt I see in my consulting work is a result of hardworking owners trying to get by on too little. If you haven't charged enough in the past, you may have used debt to just get by.

Step Three:Stop buying stuff on credit. On a recent episode of "Saturday Night Live" they aired a spoof of a TV commercial for a new debt reduction book called, "Quit Buying Stuff You Can't Pay For." It was a one-page book with one sentence on the page: "Quit buying stuff you can't pay for."

Step Four:ReadThe Richest Man in Babylonby 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.

Step Five: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. Talk to the owner or general manager of your supply house. Work with the credit agents for your store cards. Let them know you have a plan and that you are committed to paying off the balance.

Step Six: Start saving.A little bit every month adds up. Start with whatever you will commit to; $100 is better than nothing.

Step Seven:Systematically pay down debt. This is the easy part - and the hard part. It is easy to do it. The problem is, it is easier not to do it.

The following example is based on the great works of John Cummuta. (Check outwww.nightingale.comand search for John Cummuta.)

Put together a grid of all your debt. The grid in Figure 1 reflects a family's personal liabilities. In this example, $6,145 is the monthly debt reduction total. This stays the same every month until all loans are paid. (You could do a separate grid for your company debt.)

Note that this debt reduction dollar amount is in addition to the amount that you are systematically putting into savings every month. Once your debt is paid, you could start putting the entire debt reduction dollar amount straight into savings every month. How fast would that stack up for retirement?

Figure 1. Sample debt reduction grid.

Drop Excess Baggage

You can do this. It's easy. So, why do we fight what we know is right?

We carry around all kinds of emotional and psychological baggage. Maybe Momma always told you what to do and you are still fighting Momma. Maybe you are in denial about what you really owe. Debt management counselor David Huffman claims, 97 percent of people don't know what they owe. "No one ever taught them ‘Money 101' or ‘Debt 101.' That's why they are broke and getting deeper and deeper into debt."

Whatever the problem is, get over it and get disciplined. Now you know. Put this system in place today - and bring down your debt.

Thanks to J.R. and Keresa Richardson of Benjamin Franklin Plumbing in Dallas for helping me bring this procedure to life.

Are you ready to make more money? To bring down your debt? This simple form can help you stay focused and disciplined. I would be delighted to send you a free customizable Excel file of this form. Just go's Contact Us page and request the Debt Reduction Form. We will send it to you via email at no charge. I am here to help you bring down debt and increase your freedom!