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Paying Off Debt

Lesson 9 from: How to Make Money

Ramit Sethi

Paying Off Debt

Lesson 9 from: How to Make Money

Ramit Sethi

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Lesson Info

9. Paying Off Debt

Lesson Info

Paying Off Debt

We're going to go to a skype interview now. I've actually never spoken to the student of mine on skype or video were e mail buddies, but he's been a student of mine for a while, so he was in credit card debt. Uh, he didn't know how to pay for many other things, and yet he turned it around, and I don't want to ruin some of what he's done his name's james, but I do want to have him share his story. We're gonna spend a few minutes chatting and see how he was able to pay off credit card debt and get into a bunch of james hello, what's up, mew looking here. Okay, look here. Hey, we're gonna get this one. I'm looking. Okay. Great. Hey, james, how you doing? I'm doing very well, aren't you? I'm doing great. It's. Nice to talk to you. Where are you calling in from today? I'm calling from arlington. Right outside washington. Beautiful. So if you don't mind, we've got just a few people here in the audience watching and a few thousand outside watching. But what if you could tell us your story abo...

ut, you know, when you were in credit card debt and how you felt, and then what happened after that, yeah. You know it's decided to kind of get together talk it was great to look back and think about some of the things I'm going through recently and it's fun to reflect and look at the progress that you make basically graduated you know, two thousand seven with decent degree from a great school graduated from university north carolina chapel hill um oven in state student didn't have that much of student loans but I definitely racked up some credit card debt and didn't really know how to manage it it's it's just it's that age old story you know I had four credit cards before I was twenty three years old and uh they were all maxed out and getting the collection calls all that you know, it's unsolved all the same stories so I kind of decided tio try to make some life changes and you know, before I tackle the credit card that I actually moved up here to d c but two and a half three years ago and that was when you know, women to the big city I wasn't ready for a naturally and the credit card that started back up even mohr so I've been reading your stuff since two thousand six uh when it was just the blogging and you know it was kind of interesting and this guy has a fun approach to it but it was very intimate was every couple of months I check out an article before I moved to d c I ended up doing some of the free material for an one k and I was like, you know, this is this is this kind of sounds good on so just a paraphrase it I mean, you know, living in a lot of dead not really know howto handle it decided to kind of just adopt some of the stuff that you talked about and really go full stop about the book you always talked about. Hey it's, just ten dollar and sauce like are finally doing it on paper all by the book. This is the last ten dollars, but I have als trying uh, basically, just in a nutshell, I had about five credit card debt and it was gone in a year. You know, start a side business, doing some soccer training and doing a little bit of deejaying the soccer training bits actually turned into a full fledged llc that that's a money some seed money for for and and that led to me meeting for college administrators that got me my dream job is a college soccer coach so it's all kind of full circle it's kind of, you know, jumping all over the place, but just to go back to what I felt like that kind of debt, I was writing some notes today to get ready, talking I remember thinking I don't think I'm going to get out of debt, you know, out of credit card student loan that you know, everybody's dealing with that we're making making it work but I remember thinking these guys are going to call me every single day andi I'm going to have to deal with it and it was really really messes with your head and so take that you know, I'm sure you've talked about the big the quick winds down one card and then all of a sudden say I can do this, you know, paid out another one and then it just becomes you know, just I don't know if you have any other I don't want to just ramble on if you have any now this terrific so let me ask you a few questions first I'm so proud of you uh you took you typically material that was out there and you actually applied it and that makes me very proud because it's difficult to do um it's easy to read it it's easy to do nothing it's easy to read something and say, well, I read it that should be enough, but it's much more challenging to actually do it, especially when you're in debt and I want to talk about that for a couple of minutes, you know, I got an email from a reader that says when I was in debt, all I could do was think about getting out of debt every decision I made was about getting out of debt can you talk to us a little bit more about how you felt when you were in that debt and you moved to d c and that debt started going up? I mean it's crazy because it's it's such a psychological burden and what ends up happening is you don't realize when you get four credit cards in your eighteen nineteen or whatever that that is probably the biggest factor besides your criminal background check when you're just trying to find an apartment I mean, I was just blown away I was like, wait a minute or even by the way now getting a cell phone you know, I dealt with that I had that you know, I have sprint now is a carrier and you know, the reason why I have spring I mean, I don't really amount of big cellphone guy but remember there were they were a credit card company I'm sorry a phone company that didn't do a credit check so I was like, alright, sprint so you know and it just it was such a burden because you don't see how it's going to come down I mean, how do you pay off? I haven't you know, one of the cards got up in the twelve hundred range or whatever which was the biggest biggest amount for me let me ask you just a couple of questions about credit card debt clearly you knew you should pay it off right? You knew you should get rid of it but you didn't in the past it actually went up what changed to make you be able to start paying it off slowly and steadily um what be honest uh you know the book for things that perspective the out just in terms of know what? Siding teo all all of the work something out yeah. So, um what I ended up telling your assistant jeff we're working out the deal with getting on the call uh for the classes is I got to got to a point where I was so comfortable talking with these credit card companies and after you pay off one and negotiated settlement I negotiate a lot of settlements and I would say to them, look, I've got three hundred dollars that I can pay you a month you knocked down half of the principal I will make three love once lump sum payments and you can do it automatic draw and you you decide what date it comes out but you gotta meet me halfway on the principal cause I'm not hey all you know most of this principle is interest these air purchases I made when I was eighteen years old a lot of it's like who did the dorm and like you know, whatever getting a taxi home after going out so you know let's let's be realistic here so that was and then that coupled with some of the other strategies I learned from your material which is finding waiter and income on the side and you know the sales stuff and I'm unearned one case student I bought what not just about to enroll in your dream job course and working out some details but yes so it was just a matter of getting on the phone you know, the thing that I really want to tell your students and everybody that's watching is I honestly believe one hundred percent that these credit card collections people in these companies they rather take a little bit less with principal and nothing at all and have me speak the lakers forever and take me to court that costs so much more money for them so you know, they were willing to work with you and remain you know, it's funny I've used for strategies on you I've called you up and said, hey you know what I can't use I can't make this payment for this is when I was taking or earn one k but I can take it next wednesday can we just push it back cool of course so let me limp ozzy there this this is amazing stuff first of all I anoint you honorary indian because you're amazing. I love what he said about negotiating settlements. That's. Incredible. Now there are certain times you can negotiate settlements in certain times. You can't. But look at how agreeable he was. He said, look, I was eighteen years old. I was stupid. We gotta work something out. What can we do? That's a very good place to come from now. Are you going to negotiate a settlement on, you know, six hundred dollars balance? No, just pay off your debt. But if it's a lot and it's going up and you have a very limited income, you say, look, what value can I add to the credit card company? The fact is, they wantto get some amount of cash. We're gonna get james back on the line. But let me also paraphrase, the other thing is he mentioned after he paid off a debt that he also started earning more money. Now, how many of us, mostly air just so fixated on cutting back and paying off things that we never actually think about expanding the pie. So he joined my course on earning more money called earned one k on. I'll tell you why I named it that we'll talk about that tomorrow, it's a very interesting story, but he actually was able to expand his pie now he's talking about finding his dream job, which is day three and also have a course on that find your dream job that it's all about living a rich life first we nailed down the personal finance stuff automate that pay off our debts, start investing automatically boom done check next can we earn more? Can we relate to our clients on a much deeper level than we already are? Can we raise our rates? Can we add more value than being just another commodity photographer or freelance writer? Can we actually do something much deeper and impactful? And then finally, maybe we have a full time job or maybe want to negotiate here we've got james back, james quickly tell us, and we'll take a couple of questions from the web if they have it as well as from the audience. Tell us quickly how it felt once you paid off debt to start expanding the pie and earning mork, can you talk about how that felt and what what surprised you mean it's really interesting man, because it's life changing and you know again I've been looking back on the journey to the past couple of years and it's funny like, you know you have that psychological victory of art, the cards are done and you feel you feel like you really you really came out on top and and then you start to think, well, what else can I do and that's one thing I think the last couple years have been big for as you get older, you get more emotional intelligence and you learn how to handle your feelings better but that coupled with just getting smarter about money and being smarter and being more confident, like I feel like, you know, I'm at a point now where no, I'm not going to go out, get some great job, you know, six figure job just cause I just walk in the door, but, you know, for instance, with the college soccer gig, which I've e mailed you about a million times, you know, it's, just like I left the interview and I left the process knowing these people are dumb not to hire me and a lot of that comes from preparation and but also what I've been through before, you know, and feeling like, well, this is this is impossible, I never pay off my dad well, that's done so now, so you know it, it changes things. And now, for instance, like being able to say, all right, well, and he used to talk about this all the time when I when I first started reading your stuff and I'll never be able to do that, but the whole idea of you know what I'm going to go home this weekend I'm gonna go to new york this weekend or you know what I'm just gonna order this is this is a big one for me talking about living a rich life you know what? I'm gonna do it today after the cole I'm just going to go eat sushi today I don't care how much it cost dollars in sushi loving and you can you can because you built a system that I love that I love that so let's now take some questions is incredible look at the difference in his demeanor when he was even just talking about debt right like look at this guy can't stop laughing I love it I know this amazing it's absolutely amazing james because when you talk about like I'm going to go buy sushi and I'm gonna spend whatever I want I don't even give a damn that is the sign of someone who's really progressed along that I will teach you be rich path right you paid off the debt you got rid of the negative stuff now you're actually looking forward how do I grow my rich life so let's take some questions goto audience here if they have any will also go to the web anybody who has questions james will you khun same to me and I'll say it to you james but who's got a question the audience if not, we'll go to the web as well questions about how he paid off his debt how he started earning maur what surprised him or if it were me asking questions I would want to know about the psychology of change I would say you know I have three thousand dollars in debt and I just feel like I'm never going to pay it off where I'm not in control but there's always some unexpected expense out there these are the kind of things I want to know this the guy who's been on the journey that that many of us want to go on right he started off in a pretty desolate place now look at that you know is you can do whatever you want sarah where some of those psychological barriers and how did he systematically overcome that? Yeah james did you get that I did? I did. I can hear her great. Well, I gotta be honest and I'm going to sound like such a remedial honk and it's funny I love this go on. Probably think like that they're watching this college did they did they rehearsed this is this guy for real but I got to be honest, you know, the questions about psychological barriers and the reality is if it were totally up to psychology I would be bankrupt right now um I had to find a way to make it automatic and the reason why is because I wasn't if I were making one hundred thousand dollars then I could just say all right this next month I'm going to put three thousand towards that one card or five thousand towards this whatever whatever that you have but because it's funny part of what I like about the stories that I was actually making less income that I've ever made when I made when I paid this stuff off because I had system so but just teo be more direct with the question psychologically you know you want it it's hard to convince yourself that something's gonna work and so that's where it is good to have a system and it's see results other people have had which is why I think what we mean is doing here is great by bringing in real people that have done it it's a little more reasonable it's kind of like, you know, your parents telling you you need to do this eat this and that's like mom you don't do those things come on, you know, so when you have people that have actually done it talking to you it it really helps and that's been a big reason why I enrolled in earn one k and why I'm about to do dream job is, you know, just hearing people in seeing it and then having a little bit of that success myself you know I told people I was at a twenty to thirty percent adoption rate for some of your negotiation and dreams stop drop free material and that was incredibly helpful to me totally switching careers, job making more all that stuff and so it's like if that's a twenty thirty percent adoption rate you know if I really dove in here, what would happen and that's that's basically the story and I'm sorry to sound like I'm no you listen you khun glorify me all day long is amazing all right? No that's that's really great I love I love that you said first of all, you were actually making less when you paid off all that debt that really shows you the power of systems and it really it totally radically challenges what most of us think most of us truly deep down believe that it's about willpower well, I mean from our bones because we've been raised that way, you know what I need to make more and then I'll just try harder and put five k a month on this credit and it just doesn't work if it worked, we would have been doing it and now you know that you could tell this is a master of systems he's mastered systems I mean, you're right away on the systems tip I was talking with jeff about how I do my banking in your I n g I automation system yet, and I really took that literally. Apparently not a lot of people do that, but with sub accounts, I have a sub account called d j equipment and, like trip toe, you know, bachelor party or whatever. And I didn't that's just kind of ah, a random anecdote, but I mean, that's kind of my thing is I haven't found one that you know, if I need a couple hundred bucks. And yet, for whatever reason so perfect. So let's, get a couple more questions, james, and make sure we get a couple more here. What we got from the web, we have plenty from the web. Peter v is wondering after making a payment on a credit card. What stopped you from just spending that money on your credit card again? Ok, good question. Let's do a lightning round, so we'll answer these as quickly as possible to get a bunch of them and god. Okay, just two part answer a some of the cards have been delinquent for so long, they've been closed, so I couldn't make any more charges to him. But also, you know, that's where systems come into play and I cut up cards to stop spending money on him and got him out of there, some people put him in a freezer very good. Next. So the difference is how do you handle credit cards now? Do you use credit responsibly now, or did you just get rid of your cards? No credits. Credits actually a great tool. I mean, you know, think about airline miles and points and stuff like that. It's it's a great thing to have. You know, I had to start off with the security card, obviously, before I could get another one. I'm sure you guys have talked about that today, but no credit is an amazing tool. I'm not anti credit. I'm not anti loves. I just managing them. Well, you khun really, really get a lot of good benefits specially if you travel a lot like to shop, love it couple more. Yeah. Okay. I got one from jodi. How did you overcome that feeling? I want it done right now. And I want to live my full potential while fighting the debt and the feelings related to it. Being realistic looking it's all about the numbers. I actually, you know, I should have shared a spreadsheet that I had where I basically had the balance and I had the amount that I had scheduled to come out. And I have the graft, and I said, all right, I'm going to be done with this in january two thousand eleven if I keep making these payments and I would even plug in extra payments and different numbers, I mean, I really went overboard, and that helps having a plan, I mean it and being able to show yourself all right, this is the plan this is what I'm going to do is not a budget it's just gonna come out of my account and and that really helped because you believe in yourself and you can see it. You can literally see last question here this terrific games, let's get the last question good let's, go ahead and go with speaking of something we talked about earlier fame is wondering, did you do the credit card debt negotiations when you had maxed out and did it affect your credit score? It did. I mean, I'll be totally honest. I'm not gonna be able to get a great interest rate if I bought a house tomorrow. Obviously I read remains material, so I'm not going to buy a house ever get a core alone or whatever, I wouldn't have the best. But I'm also not going to plan I don't plan on buying a car, but it does affect your credit and that's the consequence it's just kind of like not making good grades in college you can't go back and fix your gps so you have to do your time probably seven to ten years before I get back up to a really really good credit score but it's worth it to not have a balance that's the psychological I'll take a bad credit score if it means I don't have to worry about getting collection calls or thinking oh my god, I'm going to make this payment so it's it's worth it? Does anybody else love this guy like the way you answered that is like one hundred percent in my opinion one percent correct it's like look, I messed up I'm going to take responsibility for that, but I weighed the odds and I decided that I'm willing to take a hit to my credit in order to not have a balance not be psychologically demoralized every day and be able to start living a rich life. I think you've done an amazing job, james, I'm thrilled to talk to you cause we've been emailed buddies for a while uh, you know, I'm so thrilled and you really the reason that I wanted to bring you on today even though we'd never spoken like on skype or whatever is you've really traversed that I will teach you the rich path and forget about my stuff you implemented it you took it you went from a pretty bad situation which is kind of just irresponsibility and spending you not only paid that off, which is a huge psychological win but then you actually grew grew the pie psychologically we can tell I mean I love the comment you made about sushi I'm gonna spend whatever I want because I can and now it's like all upwards so I want to thank you everybody here that thousands of people watching thank you, james and let's give him a round of applause thank you for getting that catch up later on. Thanks so much. All right, take care. Terrific. Okay, I want to just kind of put a bow tie around that because that was incredible. You know, I like what he said about it's kind of cool bringing people on here. I've been talking about this stuff I've given you examples and script but there's nothing as powerful seeing someone who's done it right? Look at how happy that guy looked. It looks incredible because there's a weight lifted off his shoulders and but what would you how would you characterize him now? Like what would you describe him as if you were to say savvy, what else carefree I love that guy doesn't have a care in the world because he knows he's got his basics handle what else? Totally the part about him, like accepting responsibility for his credit that is authentic, he's not trying to cover up something he messed up, he knows it he's willing to take the consequences, I would say he looks in control, right? He looks really in control and like he has options, more options than he can even he can do whatever you want. Exactly, remember went out where he wass exactly remember when I talked about that sushi restaurant and how they have options? Remember how we talked about how I turned out over a million dollars a year? Because I don't want those type of students and I only want to work with the right types of students that's options that's being in control, that's not worrying on a day to day basis did I pay that? Should I buy this smaller medium? Am I goingto what is investing it's scary to me, it's saying, you know what? I handled it, I checked the box it's automated and now I can move on with the more important things in life, important things not paying off debt, not even you didn't hear him talking about logistics of bill pay, he does it he's automated using my system but what is he talking about talking about finding a dream job he's talking about going out to eat and spending whatever he wants? I don't know why I keep going back to that sushi thing, but you guys see the point right? How carefree and confident must you be to say I'm going to go and I love I love x and I'm going to spend anything I want like for example, I like going to vegas when I go there I'll spend whatever it's conscious I love it but I don't care about certain other things and I just I just won't spend that much on them, okay? Plus I'm investing I'm growing my business I'm serving my clients my students so I could do those things I want to do let's take questions and reactions from the web about what they thought about that what we have another word that people use for james was he seems at peace really like totally I have a question for you or me okay, how does that make you feel? Oh my god this is why I do what I do. I told you when I started this blawg I was this weird cocky college kid and and like I started it because people said they would come to my free class and they never came and I was very demoralized for like a year and a half and I didn't plan to make money I didn't even monetize for years and years, but I started seeing people say stuff like I use your use your techniques and I paid off five thousand dollars in debt. Now if you google rem eat satay happy birthday if anybody watching does that right now, you'll actually see every year on my birthday I asked for just one thing I don't usually ask for anything from my students but ask them for one thing I say just leave a comment telling me one thing you've done with my material free paid I don't care in fact ninety eight percent of my stuff is free and you should see the responses five hundred plus comments I paid off eighteen thousand dollars in debt I got a forty five thousand dollars raise I've funded my college my kid's college educations for the next like fifteen years that that's why I do what I do right? Yes, I have a business but where else can you write a book or create material tested with hundreds of thousands of people and then get james to completely change his life? I love that that's a good that's a softball questions I appreciate it it's so fascinating for me to see you teaching this but to see how you react well, I mean I treat my my sight like a personal laboratory and every day I'm running different tests, I want to, you know, that's how I discovered things like like, if you open up most money books, the first thing they tell you to do is keep a budget, and the first thing people do is close the book. I discovered certain key phrases that we use that's why keep talking about code words? And I discovered how to test these and actually change behavior instead of writing yet another blawg post or another article or another book where it sounds good, but no one has she does anything. So if you come to my site, you're seeing the results of tests on hundreds of thousands of people fact, if you go there right now, you're probably going to be going through a test, so if you go to I will teach you to be rich dot com slash creative life, we're actually I believe we're running tests on that page right now, so we're running all kinds of tests, and basically by the time you see something I write, it's usually been tested with tens of thousands of people, if not hundreds of thousands.

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Ratings and Reviews


This course changed my life. After watching Ramit on Creative Live, I bought his book, then signed up for his newsletter, then bought several of his classes. You could say I am officially drinking the Ramit Kool-aid now, but I'll tell you why... His stuff works. You have to trust the system, but I've been able to create a rich life for myself by my definition of rich and I am so happy. It takes work, but I am so grateful I found Ramit in my 20s so I can truly enjoy my 30s over the next decade. Without this course, I would still be complaining that people don't want to hire me because my prices are too high and whining that I am not valued, when in reality, the problem was me. Thanks Ramit for always speaking the hard truths and giving people wake-up calls to get their act together and live the life they want... It's possible!

Adrian Farr

Ramit is a huge inspiration, he is not just a 'been there and made loads of money' kind of guy, he is a 'been there and made loads of money, and here's how I did it' kind of guy! Ramit really gets down to helping you understand not only how to make money but also how to save it too. I am looking forward to reading his book and plan to implement a lot of his systems into my own life.


I have taken a few business classes for creatives online, but this is by far the most comprehensive, most practical course of all. Especially for someone like me who loves Ramit's work but has not made a decision to commit to his full courses, this is a great introduction for what he can offer. He pushes you to think outside the box and see all the possibilities that we can have in a very clear, logical way. If you are unsure which class to take to learn about business, this is all you need.

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