The Entrepreneur Forum | Financial Freedom | Starting a Business | Motivation | Money | Success

Welcome to the only entrepreneur forum dedicated to building life-changing wealth.

Build a Fastlane business. Earn real financial freedom. Join free.

Join over 80,000 entrepreneurs who have rejected the paradigm of mediocrity and said "NO!" to underpaid jobs, ascetic frugality, and suffocating savings rituals— learn how to build a Fastlane business that pays both freedom and lifestyle affluence.

Free registration at the forum removes this block.

How do I manage my Debt?

sa_ill

Contributor
Read Fastlane!
User Power
Value/Post Ratio
66%
Feb 10, 2020
56
37
Here is a breakdown of my debt:
1. Loan against my home (valued around $500,000)
Monthly Payments of $5000. Have to pay till 2030.
2. Credit Card
Total Overdue: $3000. Minimum Payment every month: $130
3. Motorbike Finance
Monthly Due: $300. 10 More Payments to Go.
4. Car Finance
Month Due: $200. 12 More Payments to Go.
5. Money taken from Private Financers - fixed payments, no additional interest or penalties
Remaining Amount: $50,000. Minimum Monthly payment: $2,500
6. Loan Against Gold
Total Value: $15,000. Monthly Payment: $300

My product is trash bags, I have my own brand. I had outsourced my manufacturing. Recently I got into an agreement to take over a factory which has machinery. All I have to do is pay a monthly rent of $800, electricity charges and obviously, labour and raw material, so this will increase my income. This has the potential to net me profits in the range of $5000 - $10,000 per month, depending on market conditions (which are really bad at the moment).

I lost a lot of money in a bad property deal, in fighting lawsuits, and some bad financial decisions.

My current monthly profits: $2500 (Down 300% due to pandemic).
What strategy should I adopt to get on the road of being debt free.
 
Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

Kasimir

Bronze Contributor
Read Fastlane!
Speedway Pass
User Power
Value/Post Ratio
93%
Sep 4, 2020
348
323
Switzerland
3. Motorbike Finance
Monthly Due: $300. 10 More Payments to Go.
4. Car Finance
Month Due: $200. 12 More Payments to Go.

Maybe a stupid question. But if you fight debt, why do you own a motorbike and a car?
If your main goal is to get debt-free you have to work as much as you can. You have to spend around 8500$/monthly only on your debt. So the math is simple work as much as possible and spends as little as possible for the next 6 months. And if you have some money saved up, use a part of it to pay debt with high interest.

Have no idea what to do except hard work and minimalize living expenses. And try to avoid more debt.
 

Ethan_Scott

New Contributor
Mar 1, 2018
16
9
41
India
If you already have such a high amount of debt, you can opt to cut down your motorbike or car loan so that it will ease off your overall debt.
 

James Klymus

Gold Contributor
FASTLANE INSIDER
Read Fastlane!
Read Unscripted!
Speedway Pass
User Power
Value/Post Ratio
353%
Dec 28, 2018
474
1,672
28
Chicago, Illinois
Well, I would google a guy named Dave Ramsey. I don't agree with everything he talks about, namely his slowlane "save your money and invest it in the stock market and in 30 years you'll be a millionaire"

But I do like most of his advice for paying off debt. If I were in your position:

As far as the vehicles, I would either sell them and pay off the loans, or throw as much income at them as I can to pay them off. Then I'd sell the bike to pay off the CC debt. Do you have any savings you can dip into?

Then I would sell as much crap that you don't need as you can, and throw it at the balance of one of your loans. $5,000 a month for the next 9 years? And you're only making $2,500/month profit? The math doesn't work there, I would sell the house and rent something until you get your self out of this mess.

There's really no secret to paying off debt. I personally believe you should pay every red cent you borrowed so that you learn your lesson and don't do that shit again. It's supposed to be painful and hard. But while I have no experience doing this, I have heard of people negotiating down their debts and making a settlement with the bank/collections company. Like I said though, Morally I would pay back every cent.

I don't know if you have a day job or a family, but I would get a job/another job and start throwing as much as possible at these loans. The $5,000 a month for 10 years makes me dizzy just thinking about it.
 
Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

AFMKelvin

Some Profound Quote Goes Here
Read Fastlane!
Read Unscripted!
Speedway Pass
User Power
Value/Post Ratio
199%
Jan 26, 2016
733
1,456
31
Rice, Texas
Here is a breakdown of my debt:
1. Loan against my home (valued around $500,000)
Monthly Payments of $5000. Have to pay till 2030.
2. Credit Card
Total Overdue: $3000. Minimum Payment every month: $130
3. Motorbike Finance
Monthly Due: $300. 10 More Payments to Go.
4. Car Finance
Month Due: $200. 12 More Payments to Go.
5. Money taken from Private Financers - fixed payments, no additional interest or penalties
Remaining Amount: $50,000. Minimum Monthly payment: $2,500
6. Loan Against Gold
Total Value: $15,000. Monthly Payment: $300

My product is trash bags, I have my own brand. I had outsourced my manufacturing. Recently I got into an agreement to take over a factory which has machinery. All I have to do is pay a monthly rent of $800, electricity charges and obviously, labour and raw material, so this will increase my income. This has the potential to net me profits in the range of $5000 - $10,000 per month, depending on market conditions (which are really bad at the moment).

I lost a lot of money in a bad property deal, in fighting lawsuits, and some bad financial decisions.

My current monthly profits: $2500 (Down 300% due to pandemic).
What strategy should I adopt to get on the road of being debt free.

If you're single it should be easy to pay off all your debts. Just sell the bike and house. Move in to a smaller cheaper house. Keep doing what you're doing without spending money on anything that's not essential and wallah debt paid.
 

ZCP

Legendary Contributor
Staff member
FASTLANE INSIDER
EPIC CONTRIBUTOR
Read Rat-Race Escape!
Read Fastlane!
Read Unscripted!
Summit Attendee
Speedway Pass
User Power
Value/Post Ratio
336%
Oct 22, 2010
3,952
13,267
Woodstock, GA
First .... decide you are going to do this.

Leave all the excuses, explanations, sad stories, etc. behind. No one cares.

Decide you will do this. Then do whatever it takes to make that happen.
 

YoungPadawan

Miles to go before I sleep
Read Rat-Race Escape!
Read Fastlane!
Read Unscripted!
Speedway Pass
User Power
Value/Post Ratio
280%
Nov 7, 2015
498
1,392
30
1st: Pay off your credit card debt. That will most likely have the highest interest rate of your loans. Don't keep a balance on it, pay it off in full each month.
2nd: I'm not sure where you live, but if I were in your situation, I would sell the house and rent a much cheaper place to live. $2500 a month profit is not a lot to work with.
3rd. Sell the bike
4th. Keep paying the regular car payments until it is paid off.
5th. Keep paying the other 2 loans off according to schedule
6th (optional) if you can, get a job (or a second job) to pay down debt
 
Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

AFMKelvin

Some Profound Quote Goes Here
Read Fastlane!
Read Unscripted!
Speedway Pass
User Power
Value/Post Ratio
199%
Jan 26, 2016
733
1,456
31
Rice, Texas
First .... decide you are going to do this.

Leave all the excuses, explanations, sad stories, etc. behind. No one cares.

Decide you will do this. Then do whatever it takes to make that happen.
Yup any struggle humans have you must decide when to say enough is enough. That's why I don't buy the excuse some people have with addictions. Even homeless people find some type of pleasure living that life.
 

Beerbread

Bronze Contributor
FASTLANE INSIDER
Read Rat-Race Escape!
Read Fastlane!
Read Unscripted!
Speedway Pass
User Power
Value/Post Ratio
144%
Dec 2, 2019
151
217
New Jersey
Definitely read the, "Total Money Makeover" by Dave Ramsey. As @James Klymus said, he is slowlane after you get debt-free, but the snowball method he uses is fantastic. I paid off my credit cards and I'm on my way to paying off my student loans very soon using the methods in the book as well as binging his segments on YouTube.

If you want to be fastlane, get rid of all the financial stress in your life and it would be easier to absorb loss when you know where your cash is going.
 

Johnny boy

Legendary Contributor
EPIC CONTRIBUTOR
Speedway Pass
User Power
Value/Post Ratio
620%
May 9, 2017
2,929
18,173
27
Washington State
What is your income? Is it just the 2,500? If so you obviously are going to run out of money. I'm assuming you have a job. How much are you making in total?

Many people advise paying down your debt, saving money, etc. That is great advice, IF you aren't a business owner and plan on being mediocre. It's slowlane.

Here's why.

If you put 10,000 in the hands of a stupid person. They'll spend it all.

If you put 10,000 in the hands of a disciplined, risk-averse slowlane person, they'll save it.

If you put 10,000 in the hands of a savvy business owner, they'll turn it into 50,000 with their business.

For the first 2 people, it makes more sense to avoid debt, lower interest payments, etc. Because the price of that debt means its better to pay it off early and avoid the interest.

For the business owner who turns money into a lot of money, it only makes sense to pay down a loan if the interest rate is higher than the rate you can increase that money.

If you can double your money in one year, it makes sense to borrow $100,000 at a 50% APR!

If you can't double your money, or even increase it by 10%, you would be stupid to take out a loan over 10%.

The difference comes down to what you can do with the debt.

I love debt. I wish someone would be smart enough to give me a million dollars. That's because my business is growing and anything I put it comes out multiple times larger. If someone offered me a 20% APR loan I would absolutely sign up this instant. Because I know I'll turn it into a 300% return next year.

People who don't really understand money, those who regurgitate Dave Ramsey (advice for slowlaners) will tell you to pay down all debt and stop buying starbucks coffees.

IF you have a business that is going to provide you with a healthy profit margin, and you're confident that it won't go under anytime soon, then here's what you should do:

Take as much equity you can out of that house (or at least refinance to a longer term to improve your monthly cash flow situation)

Put the money in your business in the most efficient way possible.

Pay off the highest interest rate debt only if it's a similar rate to what your business profit margin is. If your business is making a 30% return and credit cards are 18% you would be losing money to pay off your cards instead of putting the money into your business.

Fastlane finance ends up looking similar to sidewalk finance because there is plenty of debt. The difference is that you use the debt for income producing assets like a business you control. The return on a business you own can be many multiples of whatever consumer debt you have. That's what makes it a better decision.

If opportunity cost went on people's balance sheets, middle class slowlane people would realize how much they lose each month. It's a million times more than the amount they saved with their frugality.
 
Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

minivanman

Platinum Contributor
Speedway Pass
User Power
Value/Post Ratio
265%
Mar 16, 2017
1,722
4,562
54
DFW
STOP PAYING EVERYTHING!
1. Move in to a cheap apartment.
2. Buy food
3. Pay electricity
4. Pay your car. Sell the motorcycle.
5. STOP paying your credit cards last month! You do not need your credit cards to live. You can not live inside your credit cards. You can't eat your credit cards. You can't magically fly on your credit cards to where ever you are going.
---------------------------------------------------------------------
See how we drew a line. Now after you pay all that, add up how much money you have left.
----------------------------------------------------------------------
6. Pay off the remainder of your motorcycle loan as fast as you can. Do not pay any of those other things, get that small loan out of the way. This should take around 4 months. BAM! Gone!

7. The remainder depends on your business. How do the rest affect your business? Make payments on the one that affects your busines most until it is paid off. Then move on to the next one. Save those credit cards for last..... they should not concern you at all until you have everything else paid off 100%. A great reason to never let another credit card own you in your life.

This should be a great reason to never take any kind of loan again, ever in your life! For every 1 great loan, there are 10,000 bad ones..... you are one of the bad ones. You better figure out a way to sell some trash bags..... LOTS of trash bags. Why is your market down? Did people stop buying trash bags? Seems like people would have MORE trash since they have been home more this year.

Dave Ramsey all the way. I've never been in debt but I've listened to Dave a lot on the radio when I was bored.
 

becks22

90% coffee, 10% everything else
FASTLANE INSIDER
Read Rat-Race Escape!
Read Fastlane!
Read Unscripted!
Summit Attendee
Speedway Pass
User Power
Value/Post Ratio
271%
Jul 6, 2016
787
2,129
31
Upstate NY
All the advice in this thread is very good but I'll add in my two cents.
Interest rates are very low right now. You may be able to consolidate some of the debt into one creditor and reduce your interest rate. That may help long term. The best thing you can do is sell what you don't need and reduce your expenses. Not only live within your means but live considerably under your means. Call your creditors and ask them if there is anything they can do with the interest rates. Over the next 5+ years, you could save some significant cash.
The best way to pay off debt is to make more money to throw at it. Is there anyway you can grab some low hanging fruit with your trash bags?
 

sa_ill

Contributor
Read Fastlane!
User Power
Value/Post Ratio
66%
Feb 10, 2020
56
37
But if you fight debt, why do you own a motorbike and a car?

My car debt is almost paid off. I use my motorcycle and car for business. I'm self employed. I make a lot of deliveries myself, by loading the material into my car. I use my motorbike when I have 3-4 meetings a day in congested areas with little or no parking. Both of these are invaluable assets to my business.

I don't know if you have a day job or a family, but I would get a job/another job and start throwing as much as possible at these loans. The $5,000 a month for 10 years makes me dizzy just thinking about it.

The house belongs to my father, and he took a loan out of it to fund another purchase of 2 acre property. That property, we found out later was disputed, so we have a lot of cash stuck there. That property was supposed to be where we set up our manufacturing facility.

Yes, $5000 a month for 10 years would make anyone dizzy.
Under usual circumstances, I my monthly profit is around $6000 and during the seasonal months (Oct - Jan) it is around $10,000.
But the pandemic has screwed everything. Most of my products are sold in the catering line (restaurants, bars, events, wedding, railways) and all of these industries are on a halt at the moment.
 
Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

sa_ill

Contributor
Read Fastlane!
User Power
Value/Post Ratio
66%
Feb 10, 2020
56
37
What is your income? Is it just the 2,500? If so you obviously are going to run out of money. I'm assuming you have a job. How much are you making in total?
I am in line with your way of thinking. Having said that, to answer your questions:
My income: Usually around $6000 a month, and $10,000 during the good months. Pandemic has hit my business.
I dont have a job as I have mentioned. I run a trash bag business. I have a wholesale outlet in hot hub, a corporate office, and just got into an agreement where I pay a rent of $700 plus electricity, and voila I have my own manufacturing facility. This will increase my income for sure.
 

biophase

Legendary Contributor
FASTLANE INSIDER
EPIC CONTRIBUTOR
Read Unscripted!
Summit Attendee
Speedway Pass
User Power
Value/Post Ratio
474%
Jul 25, 2007
9,121
43,261
Scottsdale, AZ
What is loan against gold? Do you have gold as collateral?
 

Kasimir

Bronze Contributor
Read Fastlane!
Speedway Pass
User Power
Value/Post Ratio
93%
Sep 4, 2020
348
323
Switzerland
Okay but then you have some profit on the recent new high from gold, do you?
If so why don't sell a part of the gold? It may go further up, sure that's lost profits in your eyes but you need cash right now. In my opinion.
 

Knugs

Silver Contributor
Read Fastlane!
Speedway Pass
User Power
Value/Post Ratio
181%
Jan 10, 2016
345
624
33
Here is a breakdown of my debt:
1. Loan against my home (valued around $500,000)
Monthly Payments of $5000. Have to pay till 2030.
2. Credit Card
Total Overdue: $3000. Minimum Payment every month: $130
3. Motorbike Finance
Monthly Due: $300. 10 More Payments to Go.
4. Car Finance
Month Due: $200. 12 More Payments to Go.
5. Money taken from Private Financers - fixed payments, no additional interest or penalties
Remaining Amount: $50,000. Minimum Monthly payment: $2,500
6. Loan Against Gold
Total Value: $15,000. Monthly Payment: $300

My product is trash bags, I have my own brand. I had outsourced my manufacturing. Recently I got into an agreement to take over a factory which has machinery. All I have to do is pay a monthly rent of $800, electricity charges and obviously, labour and raw material, so this will increase my income. This has the potential to net me profits in the range of $5000 - $10,000 per month, depending on market conditions (which are really bad at the moment).

I lost a lot of money in a bad property deal, in fighting lawsuits, and some bad financial decisions.

My current monthly profits: $2500 (Down 300% due to pandemic).
What strategy should I adopt to get on the road of being debt free.


I feel like we still dont know enough about your circumstances and situation.
-Is there a way to get out of (1)?
-Can you negotiate deferred payment with (5)? That might at least open up some cashflow during these tough months.
-What is the interest rate on (2) and (6)?
-What is the interest rate on (3) and (4) and do you really need them? Did you finance or lease? Could you sell (3) or (4) early?
-Do you own anything; If you earned 10k/month previously I suspect you have some kind of assets?
-What is the outlook on your business?
-Why the hell do you have almost 8500$/month in repayments on a fluctuating income of between 5-10k/month???? I suspect (5) and (6) are new debts?
 
Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

minivanman

Platinum Contributor
Speedway Pass
User Power
Value/Post Ratio
265%
Mar 16, 2017
1,722
4,562
54
DFW
I feel like we still dont know enough about your circumstances and situation.
-Is there a way to get out of (1)?
-Can you negotiate deferred payment with (5)? That might at least open up some cashflow during these tough months.
-What is the interest rate on (2) and (6)?
-What is the interest rate on (3) and (4) and do you really need them? Did you finance or lease? Could you sell (3) or (4) early?
-Do you own anything; If you earned 10k/month previously I suspect you have some kind of assets?
-What is the outlook on your business?
-Why the hell do you have almost 8500$/month in repayments on a fluctuating income of between 5-10k/month???? I suspect (5) and (6) are new debts?

These are not all HIS debts, these are his families debts. That's the part we don't know.....
 

MJ DeMarco

I followed the science; all I found was money.
Staff member
FASTLANE INSIDER
EPIC CONTRIBUTOR
Read Rat-Race Escape!
Read Fastlane!
Read Unscripted!
Summit Attendee
Speedway Pass
User Power
Value/Post Ratio
445%
Jul 23, 2007
38,082
169,504
Utah
Here is a breakdown of my debt:
1. Loan against my home (valued around $500,000)
Monthly Payments of $5000. Have to pay till 2030.
2. Credit Card
Total Overdue: $3000. Minimum Payment every month: $130
3. Motorbike Finance
Monthly Due: $300. 10 More Payments to Go.
4. Car Finance
Month Due: $200. 12 More Payments to Go.
5. Money taken from Private Financers - fixed payments, no additional interest or penalties
Remaining Amount: $50,000. Minimum Monthly payment: $2,500
6. Loan Against Gold
Total Value: $15,000. Monthly Payment: $300

Yikes.

I see someone who spends too much money (whether it's creature comforts or bad investments) and is a poor decision-maker when it comes to money. Everything you own is financed and all assets have liens, pledged as collateral.

You have a spending problem, not an income/debt problem.

More money won't solve your money problems. That seems to be your approach, a misdiagnosis to the origins of your issues.
 
Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

WJK

Legendary Contributor
EPIC CONTRIBUTOR
Speedway Pass
User Power
Value/Post Ratio
256%
Oct 9, 2017
3,115
7,961
Alaska
I am in line with your way of thinking. Having said that, to answer your questions:
My income: Usually around $6000 a month, and $10,000 during the good months. Pandemic has hit my business.
I dont have a job as I have mentioned. I run a trash bag business. I have a wholesale outlet in hot hub, a corporate office, and just got into an agreement where I pay a rent of $700 plus electricity, and voila I have my own manufacturing facility. This will increase my income for sure.
IF you survive in business that long... How do you sleep at night with all of these burdens?
I used to carry horrible debts. No, I didn't sleep well for years. Most of it, like you, was concerning my family or it was business related. Since my business is real estate, there was a lot of debt involved. I breath a lot easier since I've dug my way out of it. I systematically used the "snowball" method.
I lived like a church mouse for years and years to make it all happen. I'm still very frugal. Old habits die hard. And there very little that I need these days. Owning a bunch of stuff has lost its appeal to me. I can afford to rent, borrow, or buy anything that I need.
 

EmotionEngine

Silver Contributor
Read Rat-Race Escape!
Read Fastlane!
Read Unscripted!
Speedway Pass
User Power
Value/Post Ratio
212%
Sep 15, 2020
239
507
United States
Well, I would google a guy named Dave Ramsey. I don't agree with everything he talks about, namely his slowlane "save your money and invest it in the stock market and in 30 years you'll be a millionaire"

But I do like most of his advice for paying off debt. If I were in your position:

Indeed. The video below from Dave Ramsey video literally changed my life. I literally threw all my extra income at loans and ate chili + white rice and Cup Noodles for days.

View: https://www.youtube.com/watch?v=lajox7PdS2g


I paid off:
1. Credit Cards (3 cards)
2. Car Payment
3. Student Loans (2 Sallie Mae Loans, and a 1 Heartland ESCI)

I have very little debt now and will only have 1 final student loan soon.

I took the picture below in 2015 to always remind me where I came from. I knew I would escape one day so I documented it. When that shot was taken I was in massive debt, unemployed, depressed and Cup Noodles... I was real depressed then (dark thoughts). I'll always have an appreciation for Dave Ramsey on debt reduction.
 

Attachments

  • 20151109_120825.jpg
    20151109_120825.jpg
    164.4 KB · Views: 7

Post New Topic

Please SEARCH before posting.
Please select the BEST category.

Post new topic

Guest post submissions offered HERE.

Latest Posts

New Topics

Fastlane Insiders

View the forum AD FREE.
Private, unindexed content
Detailed process/execution threads
Ideas needing execution, more!

Join Fastlane Insiders.

Top