How to get out of debt and gain financial stability over 7 steps

Outstanding loans haveExpenses on loans and repayment prospects half of Russians. People go into debt is not a good life, many simply do not have enough money for the purchase of household appliances, for the treatment, repair or even for food. Loans at first seem to be a good yield, but in the end only make the debtor's poorer 13% of Russians spend on monthly payments of 40-50% of revenue.

To pay the debts - it means to significantly improve its financial position.

The money that people give as a percent of the bank, could be spent on creation of reserves (which the Russians, according to the dataSocio-economic situation of Russia Moscow in January-March 2019 Rosstat, almost do recently).

And for this we must first operating strategy. Dave Ramsey, a financial expert, broadcaster and author of several books, devised a planDave Ramsey's 7 Baby StepsWhich consists of seven "children's" steps. We explain how to use them.

What are the children's step system

The path to financial freedom, according to Ramsey, is comprised of seven "children's" steps. But as they were called, not because they are light. On the contrary. When a child learns to walk, first steps are to him very hard. As an adult, who is just learning to live without debt and manage your finances.

seven-step system was invented in the United States, but people use it successfully throughout the world. Including the RussiansFamily budget. As we paid 578,000 rubles. 16 months. The technique does not disclose any secrets of magic, does not offer miracles, tricks and fraud - simply helps to set a goal, motivates and teaches to correctly distribute the money and power.

Getting rid of debt with the help of this system

Step 0. Ensure your "four walls"

At the beginning of the path to financial freedom Ramsey recommends the adoption of a firm decision: never again not borrow unless absolutely necessary. He advises to cut and throw away credit cards, does not promise to pay them for online purchases. Once the decision is made, ensure that your "four walls".

That is, make sure that all paid most essential: for example, housing, medical treatment, study.

Make money for renting an apartment, pay off the debt for utility services. If the car breaks down or a major household appliances - to pay for repairs. Solve the acute health problems. To all these costs do not distract you in the future.

Step 1. Accumulate 1000 dollars

At first glance, this move seems strange. Why would save money if it would be logical to start immediately repay all the debts? But this small reserve fund is needed for the safety net in the event of unforeseen circumstances.

If in the near future you urgently need money, then instead of having to break the promise and take another loan, you take advantage of savings.

In addition, the stock will help you feel calmer and more confident. And it is necessary to move forward.

Step 2. The payment of all debts, except for the mortgage

To do this, Ramsey suggests using the snowball method - that is, to extinguish debts and loans from the smallest to the largest. Let's just consider this model as an example.

Suppose two loans you have: in the refrigerator with a monthly fee in 2000 rubles for the repair of a payment in 5000. You start with the fact that try as much as possible to repay the loan for the refrigerator more quickly: take more work, save, and all of the extra money, even $ 100, puts on the credit score. Most likely, so you'll have to pay a little bit faster.

But when the loan is paid off, you can not relax. 2000, which were given for the refrigerator is added to the payment for the repairs. Thus a second loan you also extinguish faster because monthly payments are not 5000, and at least 7000 rubles. If you have more debts, you continue to pay them on the same algorithm.

snowball method is sometimes criticized and propose instead to use the avalanche methodDebt Avalanche Definition. It's all on the contrary: the debts are paid off from a larger (priority) to lowest.

It is believed that the method of avalanches will help pay off your debts faster and the snowball method will make it more relaxed and comfortable mode.

Step 3. Create an emergency fund for a period of 3-6 months

When you have paid with credit, were not allowed to celebrate the winds and do not begin to overspend. All funds that are spent on monthly payments and other amounts that you have managed to earn or saveYou are now allowed on it to create another stock.

At this time, such that you are, if you lose your job or become ill, you were able to live on this money at least three months. The logic here is the same as in the first step: accumulation save you from new loans in the event of force majeure.

Step 4. Begin to save for a pension

Author system - an American, and US pension system is different from ours. But also in America and in Russia, far-sighted people are trying to start saving for retirement as early as possible. For us, it is even more important: to rely in this regard the government is tantamount to falling into poverty.

Part of the money that you gave to the creation of an emergency fund, you now need to postpone retirement.

It is recommended to start with 15% of monthly income and try to increase this figure. Means you can be put on deposit or to buy them securities.

Step 5. Save up to educate children

For Russians, this step may seem not so important: the share of paid education in Russia has totaled5 the main conclusions from the reception statistics in universities in 2018 40%. But it is growing rapidly, as the cost of training. While the number of budget places, on the contrary, decreasesNumber of free places in Russian universities will decrease by a quarter. Therefore, parents, whose children are planning to someday go to college, it would be good to prepare.

Funds that were previously sent to repay the loan by a snowball, at this stage, you start off on the formation of children. Less of the money save up for retirement.

If you do not have children, you can set aside money for their own education, or anything else that you think is very important. Or, just skip this step.

Step 6. pay off your mortgage

Now you have an emergency fund, you accumulated funds for education to children (at least for a couple of years of study) and used to set aside part of the income on a monthly basis. Perhaps the earlier success motivate you (and many of those who helped this system) is wiser to refer to money, to look for new sources of income.

Dave Ramsey recommends further action on the familiar algorithm. The amount you set aside for education, and all the extra income at this stage you need to add on to the monthly payment on a mortgage to pay for it as soon as possible.

Taking into account the Russian realities of the fifth and sixth steps, you may want to swap: first, pay off your mortgage, And then to save for education. If the mortgage you do not take this step to skip.

Step 7. Enjoy financial freedom

At this stage you are free of debt, and you have enough savings to not be afraid of unforeseen circumstances. The main thing now - to keep his promise and did not go into debt. And, of course, continue to be put off by the fact that it is important for you: pensions, real estate, travel, investment and business.