My Guide to Getting Out of Debt With Proven Methods and Smart Ideas

The highly respected and well-regarded financial expert Ray Dalio had published a video back in 2018 about his Principals for Success.

What utterly amazed me was how much he says also applies to people trying to get out of debt or dealing with bad debt.

I’ve embedded the video above, but here are the key messages in the video that anyone in debt should pay attention to.

Guide to Getting Out of Debt Using Your Brain

In dealing with your debt, you will probably talk to different debt relief companies or salespeople who tell you what they want you to hear to sell you their product.

Don’t accept anything they have to say as truth. You Need to Think for Yourself About What is True.

It is only by making decisions based on the truth that you have the best chance of achieving the outcome you desire.

Truth matters more than a fantastical sales pitch or magic pixie dust to make your debt problems go away magically.

Guide to Getting Out of Debt Using Your Brain

People in painful debt for the first time will bring along all sorts of myths and assumptions about debt, how to get out of debt, and how to deal with the problem.

What people with money troubles do poorly is to Embrace Reality and Deal With It.

Guide to Getting Out of Debt Using Your Brain

Instead of reality, people make decisions and choices based on fear and emotions. As you can imagine, the outcomes from reactionary decision-making are not going to lead to good results.

For decades now, I have had a fundamental belief – There is No Sense Wasting a Perfectly Good Mistake.

A traumatic problem like money troubles can teach you so much if only you learn from it by reflecting on what went wrong and how you landed in that position.

Ray says it a little differently. He says Pain + Reflection = Progress.

Guide to Getting Out of Debt Using Your Brain and Smart Ideas

Know what you are trying to achieve, deal with the problems with truth, understand the root cause of the problem with reflection and not jump at a solution, design a plan to eliminate the problem, and then implement the plan to achieve the goal.

Guide to Getting Out of Debt Using Your Brain and Smart Ideas

Jumping too quickly by selecting the solution first is often the leading cause of debtors not getting the result they want. This is because they picked the wrong way to best deal with their problem and dealt with the situation backward.

First, you need an achievable goal and a reality-based plan. Then we figure out the best way to achieve it.

Ray talks about how everything is a machine. That is so true when it comes to dealing with creditors.

Guide to Getting Out of Debt Using Your Brain and Smart Ideas

People make the mistake of using emotion to deal with debt collectors and creditors. They try to make decisions based on logic and not how the machine actually works.

Debt collectors and creditors are not making emotional or logical decisions about you. They are a machine and make designed decisions based on business policies.

Not recognizing that your creditors are machines will lead you to make emotional decisions that will result in bad outcomes.

People typically don’t have the experience to know how the machine works, so they guess or listen to a debt relief salesperson that is trying to sell their debt relief secret sauce.

It’s not the magic solution that best deals with the problem; it is listening to someone that understands how the machine works and can use that knowledge to help you achieve your current and future financial goals.

It would help if you thought about credit reporting companies the same way. A credit report is not making a statement about you as a person; it is the output of a machine process—nothing more and nothing less.

You don’t need to try anything tricky to deal with your credit and make it better; you need to play the game and let the machine do the work for you.

We can be our own worst enemy when dealing with our debt situation. The inability to see our blind spots and let our ego prevent us from hunting down truthful information that might conflict with current beliefs can prevent us from a good outcome.

Guide to Getting Out of Debt Using Your Brain and Smart Ideas

There are parts of our brains that are not obvious to us but control our emotions. We can hold ourselves back from doing what is best for us because of our ego and unwillingness to accept an alternative point of view by acknowledging that our previous assumptions were wrong.

Ultimately you don’t benefit by finding facts that reinforce your current beliefs. Instead, you have to find out what is accurate and authentic about how the machine operates.

You will never win with creditors by playing your game instead of theirs.

Talking to debt experts like my friend Damon Day that might disagree with your positions is critical to your eventual success. Someone that will take the time to listen to you and then help you to understand a different perspective will only benefit you in your search for financial freedom.

And that’s where we come to what I think is a mistake people constantly repeat, which leads to terrible outcomes that impact their financial future.

As Ray says, you need to get help from people that are good at what you are not. Let them guide you to what you want to achieve.

If you release the thought you have the correct answer and are willing to listen to reality and truth, you can be guided towards becoming debt-free faster and with less pain. Wouldn’t you benefit from missing the unknown risks and potholes?

Guide to Getting Out of Debt Using Your Brain and Smart Ideas

I hope you take the time to digest the message here to avoid unnecessary pain and failures that can be avoided with truth, understanding, and listening to people who can advise you and care about you as much as I do. – Source