The Get Out of Debt Plan


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(It’s abbreviation is G.O.O.D.)

By Jerry Sandler

The COVID-19 Pandemic has certainly struck people hard.   One of the biggest chasadim we can do for a friend is to help them get out of debt.  It is a fulfillment of “v’ahavta l’rayacha kamocha” and is of the highest level of assistance that we can do for someone else.  Sometimes, we have a friend or relative that, for one reason or another, is constantly in debt.  There are often one of two underlying reasons for this (or both):

  • This person gets his or her sippuk, life satisfaction, from shopping or buying things
  • This person does not realize that he or she must save money and in order to that one must live significantly below his or her means

Giving them money, or finding them higher paying employment, is only a temporary fix.  The underlying dynamic has to change.  In other words, the satisfaction that they derive in buying things and spending, must be replaced with a different form of satisfaction.  One effective method to help get this friend or relative out of debt – is that the person himself or herself (both if they are married) must choose to implement a five point plan that will help get them out of debt.  This five point plan is effective.  It comes in three parts

The first part is to establish three separate funds.  The first fund is your regular savings account – you will try to build your regular savings funds.  The second fund is what we will call your emergency stash –  that is money that cannot be spent unless it is an emergency – and, even then, should only be spent on a real life and death emergency.  It is recommended that the emergency stash be either $500 or $1000 – depending upon one’s stage in life.  The third fund is what will be called your “house-buying” or your “real estate purchasing fund” – depending upon one’s stage in life as well.

The second part is to always give maser and realize that Hashem runs the world.  Generally, maser is ten percent, but if you are in special circumstances – speak to your Rabbi.  Sometimes they will tell you that you should give only 1% until you get back on your feet.

The third part is to replace your sipuk, your life satisfaction, to something else entirely.  It involves a number of steps.

  1. You must get index cards and truthfully and honestly write down every debt that you have – on a different index card. You may need ten index card or you may need fifty index cards.  On each index card, write the amount that you owe, the address of the person or entity you owe it to.
  2. Now place these index cards in the order of lowest to highest and number them as debt #1, debt #2, debt #3, etc. Ignore the interest rate that you are paying.  Experience shows that for the overwhelming majority of people in debt – the ordering of lowest to highest has a strong psychological incentive to keep you on track.  Although you may be tempted to order the debt from highest interest rate to lowest interest rate – don’t do it.  The reason is that you have primarily a psychological issue, an addiction to spending, that must be conquered.  If you do not realize this – then you will likely end up back in debt.  This is a life-long change you must make.
  3. After you have ordered your index cards from lowest to highest – type them on one sheet of paper. Include, the debt #, the debt name, and the amount you owe. If they do not fit on one sheet, then type them on two sheets and put this list on a prominent place in your life – on your refrigerator or somewhere more private, but one you will encounter several times a day.
  4. Now start paying down your debt from the top of the list to the bottom. Make sure that you are paying the minimum payment that must be made on each of the payments below the top one.  If the minimum payment on each of them is too high for your income – then you must contact each one and explain your situation.  Do not ignore them.  As you pay off your debt one by one you will experience a feeling of enormous satisfaction.  Savor this feeling, and use it to carry you through your full completion of the list.  Reward yourself for each debt number that you cross off your list.
  5. Special Weapons and Tactics. One of the most important elements of the plan involves the special weapons and tactics department.  These are things that you are going to do to help you along and making sure that you stay on track in debt reduction, and yes, wealth-building.  Remember, the goal is to change your underlying habit of sipuk, life satisfaction.
    1. Every time that you are tempted to spend money on soda – drink water instead and place the money you would have spent on the drink in a special envelope in your purse, or just place it in your back pocket. Each day, put that money in a jar in your bedroom.
    2. Every time you have loose change put it in that jar. Every time you get unexpected money, use it to pay down your debt.
    3. Make sure that you are paying down your top numbered debt – every week.
    4. Find yourself a buddy, or a partner, or an Alcoholic’s Anonymous type sponsor that you can share your joys and your struggles with. Every time you hit a milestone – share it with your buddy or coach. This is a crucial element of your overall plan and should actually be a sixth point, but we wanted to keep it to five.
    6. Minimize your internet shopping to twice a month (the 2nd of the month and the 16th of the month, and then only for essentials.  Never buy anything the first time you want it – buy it only the second time and then only after you determined that you really need it.  If you were able to avoid buying it – then put that money toward paying down debt.
    7. Often, to help you pay things down – you may need to get another means of earning money. This can involve selling things either online or in person, working out a commissioned sales position, or a number of other areas.

Don’t give up and don’t be frustrated.  Slow and steady wins the game.  It may take 12 months and it may take 3 years.  The joy you will experience, however, will be unbelievable.  After you have completed this plan and eliminate debt – change your sipuk, your life satisfaction, to something else.  Build your real estate purchasing fund.  Please feel free to contact the author at [email protected] if you need any further advice or assistance.