5 Actions You Need to Make to Get Out of Bad Debt

Not all debt is bad.

There is such a thing as good debt and bad debt—just as there are good bacteria and bad bacteria.

In the bestselling book Rich Dad, Poor Dad, Robert Kiyosaki explains that good debt is when we buy things that put money into our pocket.

And bad debt is when we buy things that take money away from our pockets.

If I get a loan to buy a rental apartment, and the tenant pays me each month for the use of that apartment, that’s good debt. If I get a loan to buy a wide-screen TV for my personal enjoyment, that’s what you call bad debt. Because it doesn’t put money into my pocket.

If you’re buried under a lot of debt, here are five crucial actions you need to make:

1. Declare your freedom day

If you think about all your debts, it’ll kill your spirit. So focus instead on your coming freedom. Write a deadline when you’ll be financially free. Call it your Freedom Day and plan for a big celebration. Read this goal daily, think about it daily, pray for it daily. Sleep with it, walk with it, work with it, eat with it.

2. Create new ways of pleasure

debts-to-kill-you-spiritDiscover new habits of simple joys. Examine your lifestyle. Have you been spending more than you’re actually earning? It’s time to cut back on things you can do without. That extra dress. That dinner out. That movie. And get the same amount of joy (or even more) from free—or almost free—pleasures. A picnic in the park. A quiet read in the library. A walk around the neighborhood.

3. Schedule your steps to freedom

With your increased savings from a simpler lifestyle, sit down and write how much you can set aside each month to pay your debts. Schedule all payments, starting with high interest-loans first. And if you can, transfer high interest-loans to low-interest loans.

4. Don’t borrow when you can’t afford it—period!

Don’t borrow to buy consumer goods ever again. If you don’t have money right now to buy it, then don’t buy it. If the credit card in your wallet is a huge temptation, then get rid of it until you acquire discipline.

5. Negotiate with your creditors

See your creditors regularly—assure them you’ll pay—but negotiate to reduce their interest rates. I’ve learned that because human beings run banks and other lending institutions, and because these same flesh-and-blood people make the policies, everything is negotiable. Everything. Don’t back down simply because they say, “It’s the policy here that we don’t decrease interest rates.” Persevere.

   The rich rules over the poor, and the borrower is the slave of the lender.   —Proverbs 22:7


Richly blessed,


This article is an excerpt from the book “8 Secrets of the Truly Rich” by Bro. Bo Sanchez (Used with permission). To get a copy of the book and other books by Bro. Bo, you may check out http://www.kerygmabooks.com/

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