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The average American household has $16,000 worth of credit card debt, $30,000 worth of auto loan debt, and $51,000 worth of student loan debt. That’s almost a hundred thousand dollars worth of debt, and I haven’t even mentioned your house!

You’re making money, just so you can make your payments to your bank. So you think if you work harder, and you can get a promotion, or you take some overtime shifts, you’ll make more money, and then you’ll get out of this mess. You start spinning your wheels faster and faster and faster, because you think it’ll get you out of this mess. But what keeps happening is your payments and expenses keep going up. Who keeps taking all my money? Well, thankfully there is a way out of this debt mess, and it can help you breathe a whole lot easier.

Make your debt cheaper

In 2019, the Federal Reserve slashed interest rates multiple times. This is bad news for your savings account, but it is great news if you have debt. The majority of people are DTF – down to finance. So when interest rates come down, it is easier for the majority people to go into more debt, because loans are cheap. It’s like when cookies go on sale at Walmart. When cookies are cheap, people don’t run over to the salad section. They grab as many macadamia cookies they can fit in their trunk.

But you’re not like the majority of people. You’re not DTF, down to finance. You are DTR – down to refinance. Interest rates are lower. Meaning, if you have student loan debt, mortgage debt or credit card debt, you can borrow money at a cheaper price, and pay off your current debt, and pay less money in interest, which brings me to my second point.

Refinance the smart way

When most people refinance on their loans thinking that they’re going to save money, they actually end up paying more money in interest, even though they have a lower interest rate. Here’s what happens. Let’s say you have a $500,000 mortgage, and a 5% interest rate, and you work for 10 years to pay down your mortgage, and after 10 years you only owe $400,000 on your loan, and that’s when interest rates come down all the way to 3%. So your bank asks you if you want to save some money. You refinance on your mortgage. But instead of taking out the $400,000 which is what you had before, you decided to take out $550,000, because your home appreciated over the last 10 years, and now you want to keep your monthly payments low. So you extend your loan for another 30 years. Yeah, your interest rate is lower, but you are going to end up paying more money in interest than before.

When you refinance on your loan, your bank will want you to either take out more money than you need, or extend the term of your loan. This way you have to make payments to your bank forever. When that happens, I want you look at your bank, stand up straight, look right into their eyes and say ‘No’. Take out the least amount of money possible, get the lowest interest rate, and continue making the same payments that you are making today.

If you are paying $2,700 a month with your 5% interest rate mortgage, and now your monthly payments come down to $2,100 a month, I don’t want you to start paying $2,100 a month. I want you to continue paying $2,700 a month, because this extra $600 that you’re paying each and every month is going to go directly to your principal with no interest added.

Get your money right

You need to get your money right. If you have $10,000 of debt you’re trying to get rid of, you need to come up with $10,000 plus whatever interest you owe to get rid of this debt. But it’s not that simple actually. If you want to come up with that $10,000 quickly, there are three things you need to do. I call these the three keys of money.

Key #1: Spend less money.

Key #2: Earn more money.

Key #3: Invest like crazy.

When you are trying to spend less money, you need to become a supersaver. Cancel the extra shopping trip, start cooking your own lunch, and stop drinking coffee from Starbucks. I know this is not easy, but this is a temporary sacrifice so you can get your money right. Once you got the saving part handled, now it’s time to earn more money. Work harder at your job if you need to, or try to make money outside of your job.

You can start a side business, become a freelancer, and start flipping things. Once you’re here, and you have some breathing room, do not go back to your old bad spending habits, which put you in this mess to begin with. Continue living below your means, because now it’s time to invest like crazy.

When you invest your money, now you’re not using your money to buy things that make you broker, you’re using your money like a magnet to go out and attract you money, because you’re putting your money to work for you. And if you want to make the smartest money decisions possible, you need to stay up-to-date on what’s happening in the finance and business world. This way, you can be money smart!