How to Get Out of Debt Guide – Part 3 of 6


This guide is about taking 6 simple steps to get out of debt. Of course, most will assume you need to be in debt to use it. That is far from the truth. Even if you think you are doing well financially you can still learn and improve your situation even further. We started in the first 2 steps with gathering our financial documents and then entering them into the NET Worth Calculator. Today we will look at the numbers and explain what they mean. This will establish our starting point; ground-zero. Regardless of where you end up on the financial podium remember there are no losers. This is just the beginning. From here moving forward you have the choice to go right or left, to say yes or no, to improve your financial situation or make it worse. The past is behind you. Learn from it and choose to live your best life now!

Your NET Worth

How did you do? Open the NET Worth Calculator and go to the Personal Financial Statement tab (it's on the bottom). Do you have a positive NET Worth? How about your Cash Flow? Which example below fits your PFS?

Financial Podium

In this short guide I am simplifying the principles and system I share in my book, How to Get Out of Debt. We are concentrating on the major items of your financial report card; your NET Worth and your Cash Flow. In my system I have created a podium so you that you can visualize where you stand. Unlike the Olypics there are 4 steps on my financial podium. There are no losers just Honorable Mentions at the least.

Being honest and understanding that we are just at the beginning of your new financial journey, where do you stand on the podium?


  • Positive NET Worth
  • Positive Cash Flow
  • Expenses are less than 65% of NET Income


  • Positive NET Worth
  • Positive Cash Flow
  • Expenses exceed 65% of NET Income


  • Positive NET Worth
  • Negative Cash Flow
  • Expenses exceed 65% of NET Income

Honorable Mention

  • Negative NET Worth
  • Negative Cash Flow
  • Expenses exceed 65% of NET Income

There is one other scenario that I did not include and that is when you have a Negative NET Worth but Positive Cash Flow. If you fall into this category then put yourself on the Bronze step of the podium.

Do you see how simply changing a "greater than" to a "less than" or a "Negative" to a "Positive" can change your entire situation? The next thing we're going to dig into is the action plan you can take to start getting out of debt and living debt-free. We are going to concentrate on the small things that make the biggest impact. Think of yourself as David from the story of David versus Goliath. David was smaller, weaker and undoubtedly destined for defeat. Yet victory was his by being courageous, determined and using a few small rocks.

Next Step: Devising an action plan

Previous Step: Your Personal Financial Statement (PFS)

Craig Kelley

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Craig is the author of How to Get Out of Debt and an avid blogger. He strives to help people maximize their time and succeed financially as well as personally. He has been a leader in several start-up companies including Mokumax Virtual Domains & Servers, Inc. and currently HealthcareSupplyChain. Read more...

4 responses to How to Get Out of Debt Guide – Part 3 of 6

  1. I wish there was more about increasing your income.

    • Thank you for your comment and I agree this is a bit shy on ways to increase your income. Have a look at Step 4. Decreasing our expenses is the easiest way to increase our income. Get rich quick schemes simply do not work. Slow and steady wins the race.


Trackbacks and Pingbacks:

  1. How to Get Out of Debt Guide - Part 2 of 6 -5 Minutes a Day - July 10, 2012

    […] Next Step: Where You Stand on the Financial Podium […]

  2. How to Get Out of Debt Guide – Part 4 of 6 -5 Minutes a Day - July 12, 2012

    […] Out of Debt Guide it is time to devise an action plan that is specific to where you landed on the financial podium. The goal is to form habits that keep you out of debt and living a debt-free life. Our financial […]

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