Kim and I have been married for over 30 years but we started from scratch people think she married me because of my money but that's not true at that time I was in between businesses and lost my second venture so not only did I not have money but we also had a lot of debt we had debts of eight hundred thousand dollars which was a huge learning experience in the end we managed to pay it all off but the lesson remains how do you pay off your debts as quickly as possible many people say to cut up your credit cards but I find that absurd because a credit card isn't the problem in fact I really like credit cards let's start with the steps to get out of debt the first step is to be honest with yourself I think this was one of the hardest things I had to do because Kim had never experienced financial disaster like I had she couldn't believe someone could drive a Mercedes and be completely broke pretending to be rich until actually becoming so I was praying to God Jesus and Buddha hoping money would come acting like I had no debts I looked great and ate at the best restaurants but I was ruined you can lie to your girlfriends but you can't lie to your wife so the first thing I had to do with Kim was finally tell the truth that I wasn't as rich as I seemed you have to tell yourself the truth because if you have a goal of where you want to get to you won't make it if you don't know where you are the second step is to stop accumulating unpayable loans immediately sometimes this means making a small sacrifice when Kim and I moved from Hawaii to California we were homeless and lived in the basement of an apartment sometimes we had to scrape by because we had no money Kim only had a couple of dollars to get through the weekend until I got home on Sunday night the third step is to make a list of all your debts the key word here is all Kim looked at me strangely when I said the word all because I had so many debts and didn't want to admit it I kept avoiding it and paying bills here and there but she finally asked me why I didn't want to admit how bad the situation was I called up my last business and finally had to sit down and write to all the investors I owed money to as well as all the family and friends I owed money to I felt bad for not paying them back earlier so she made me sit down and write it all out also a credit card company can get pretty nasty when you don't pay them so I had to show the letters I was receiving and basically tell the truth and face it I encourage you to comment if you've ever had a big problem with debts or if you know someone who has share your story your experience can help those in need fourth step is very important if you're deeply in debt it's probably one of the most important steps to take and commit to hire an accountant there were times when I tried to do my own records but when I was stressed ashamed and upset about owing so much money I didn't confront the truth and wasn't very attentive to details so Kim and I finally went to talk to my Rich Dad and he recommended we hire an accountant at first I thought it was too expensive but my rich dad told me that rich people have accountants while poor people don't keep accurate records this is the fifth step and after having a list of all your debts you'll create a visual picture of these debts in the top left corner of the board you'll write the name of the Creditor for example my Visa card top right corner you'll write the total amount owed in the bottom left corner you'll write the minimum monthly payment you have to make in the bottom right corner you'll divide the total amount owed into monthly payments for example in the column for Visa you'll write minimum of dollar 100 per month total amount owed two thousand dollars and twenty monthly payments this means it will take 20 months to eliminate that debt since the total amount owed divided by the minimum monthly payment equals 20. for each debt you have you'll create this visual image and review it daily to know how many months it will take to pay off each debt it's important to check your record to make sure everything is clear when Kim and I met we had nothing it took 10 years to go from nothing to Financial Freedom she was 37 and I was 47. That's The Power of focusing on assets rather than liabilities most people are so busy working for money trying to pay their bills and buying liabilities they think are assets first gift I gave Kim was to teach her this and now we're financially free anyone can do this it's a matter of putting your head in the right direction we met in 73 and that's when I took my first real estate investment course I lost money and gained it back but I never left the assets there are many people who can't earn a thousand dollars and the reason is because mentally emotionally spiritually and physically they're not prepared to earn that amount so Kim and I are earning several million dollars but we wouldn't have gotten there if we hadn't once struggled to get to a thousand dollars so whenever we had a problem we had to be bigger than the problem a lot of people with thousand dollar problems won't solve the problem until they personally mentally emotionally spiritually and physically develop to be bigger than the thousand dollars the sixth step is to determine the order in which you'll pay off each debt and here's where the little circular number comes in you'll start with the lowest Circle number you have people often ask shouldn't I pay off the highest interest debt first I don't want to keep paying those with the higher interest rates but you don't necessarily have to do that in this formula what you want is to see a quick result that shows this formula works so we start with the shortest debt you can pay off quickly when you see that result and confirm the formula is working it encourages you to keep going that's why we start with the lowest number as Kim says it's not about paying interest it's about how quickly you can liquidate when you look at the average person they have a job and they make money they pay the house and the money goes to the bank through a mortgage that's not an asset because money is Flowing out so it's a liability the definition of a liability is that it takes money out of your pocket while an asset puts money in your pocket so if I have a property for rent it puts money in my pocket if I live in the house it's a liability because even if I don't have debts I still have taxes depreciation repairs maintenance insurance and all that but if I rent out a property and do a good job buying and structuring it it sends me money every month I started with this when I was 25 had a small condo property and it put dollar 25 in my pocket it was a start and a good debt the debt was paid and cleared and at the same time it put dollar 25 in my pocket so I was making money from my little house every month today my wife and I have 6 500 houses that put money in our pocket every month the people living in those houses are happy because they have a place to live but all this comes from debt we have one hundred percent financing everything is debt so this is good debt and what makes a debt good are two very important words cash flow we became financially free rather than going back into debt or simply spending debt money on anything but like in Rich Dad Poor Dad we play the cash flow game what we do is invest that money in this case with all that money instead of spending it we keep buying more real estate and stocks essentially we use debt to generate income and pay our debts nowadays Kim and I have seven cars many houses and we travel by private jet but all of this is done with the cash flow from our investments not with our credit cards we have no debts just steady income from our investments so our assets outweigh our liabilities the reason many people get into trouble is that they buy liabilities first and then try to buy assets this never works and they keep buying more stuff and accumulating bad debt instead I buy my liabilities with my assets so I can have a great lifestyle the best part is we don't have to worry about money or anything because we simply have more and more money coming in constantly this process requires discipline and dedication remember it's a process that will take you from where you are to where you want to be if you don't have dedication and discipline the process will fall apart I encourage you to share this video with people you know who might need this advice if you want to continue learning about improving your finances and achieving wealth subscribe to our Channel here you'll find valuable content about investing saving and enhancing your personal finances you can also learn from the experiences and advice of experts in the business and finance world who can help you reach your financial goals [Music]