How to get out of debt: advice from Bodo Schaefer

Today, a huge number of people are gaining loans. A loan is a kind of hope for a life in abundance. In addition, you can get a loan in the current conditions at any nearby bank. Without stress of nerves and other accompanying inconveniences. How to get out of debt if you took out a loan? To do this, there are "smart" ways to repay them. Many of them are based on the advice of Bodo Schaefer.

Bodo Schaefer is a well-known financial specialist. Author of a popular bestseller called The Laws of Winners.

Interesting facts about the "financial Mozart"

When Schaefer was 26 years old, he fell into a "financial hole". In other words, he went bankrupt. His debts totaled 75 thousand German marks. In terms of our currency, this is about a million 🪙. Agree that the figure is impressive.

Nevertheless, Bodo Schaefer was strong in spirit. He didn’t give up. And I began to look for an effective financial coach. After 4 years, Schaefer was still able to earn his first financial fortune. Moreover, later he began to teach this to other people. Not for nothing in Germany he was called the "financial Mozart" of his time.

Smart and stupid debts

Bodo Schaefer introduced the concept of smart and stupid debt. He called consumer debt stupid. In his opinion, it is a short-sighted undertaking to take loans for vacation, furniture or a car. Such debts are dangerous because they form a vicious circle. They take away strength, internal resources. And most importantly, they deprive them of motivation to work. After that, a person has questions: “What am I living for?", “How to live on?” etc. How to get out of debt?

Credit is perhaps the fastest solution to the problem. But the task, according to Bodie Schaefer, is different. Finding a stable long-term income option.

It is noteworthy that “smart” loans are loans taken for business development. As the author says, without this it is impossible to imagine the development of the company. It makes perfect sense for an entrepreneur to finance a company with money borrowed from a bank.

How to close debts according to the "Laws of Winners"

1. Try to save about 25% of your monthly income. And 50% – from excess profits. Over time, the deferred funds need to be invested again. As a result, there will be a feeling that they live up to your expectations.
2. Learn to save. No need to overpay where you can buy cheaper. Pay attention to promotions, various special offers and bonus programs. Many people today use the @lowcoster Telegram channel. It is noteworthy that here you can find many profitable discount offers and save a tidy sum.
3. Money must be loved. Money should not be treated badly. On the contrary, they should be protected. However, at the same time, do not give up pleasure.

4. Try to make a financial plan for the next few years. Calculate your average income. And outline how you see it after 5-7-10 years. The main thing in this matter is to understand what REALLY can be done for this.

5. Dream big. To pay off debts, it is important to always be ahead of events. And think about income in the future. You should not indulge yourself with modest hopes. After all, it is not in vain that they say that the way of thinking gradually determines the way of life. And this is pure truth. In addition, a large goal can always be divided into smaller goals. That will allow you to move towards success gradually, without nervous breakdowns and other problems.

6. Keep your confidence. There is one simple rule – money is attracted to people who maintain confidence and stamina. So, these qualities were inherent in Bodo Schaefer. So he figured out how to get out of debt. He got out of such an unpleasant situation as bankruptcy.

7 Be brave in the face of problems and setbacks. Never be afraid to lose. Otherwise, you can never get off the ground. Consequently, all his life and remain a simple average average peasant.

8 Get used to implementing any new idea.

9. Rule 20:80. Here we are talking about the ratio of effort and result.

10 The right to wealth is given to every person without exception. To do this, it is absolutely not necessary to be born in the family of an entrepreneur or an oil tycoon.

11. Be attentive to your health. Success comes only to those who always feel good. Good looking. And does not bring himself half to death at work.

12. It is permissible to talk about financial strength only when its coefficient is at least 6 months of life.

"The Path to Financial Freedom" by Schaefer

The essence of Bodo Schaefer’s book "The Path to Financial Freedom" comes down to simple things:

There lived a poor farmer. He had a hard time making ends meet. But one day a miracle happened. One of the hens he kept laid a golden egg. 

The farmer was wildly happy. Moreover, he later decided to take the egg to a pawnshop. And throw a big feast on the whole district. The next morning, the hen lays the golden egg again. This goes on for a long time. Until one day the farmer wondered why only one hen gave golden eggs and the others did not. He suffered about it. Angry a lot. Until one day I decided to slaughter a chicken. To find out what is so wonderful inside her.

As a result, he saw in her womb a small nascent golden testicle. Nothing like this ever happened to him again. He had never seen a single hen with golden eggs.

The moral of the story is: don’t kill the goose that gives you the golden eggs.

How to pay off debt effectively

Everything is actually very simple. Imagine that the chicken is your capital. As it increases, it begins to bring you "golden eggs". That is interest and profit. Note that it is important to leave this capital intact. The income is divided into several parts. The first is necessary for the formation of capital itself. And in no case should you spend money from it. On the contrary, they should be multiplied. Therefore, in the future you will be able to have a pretty good percentage of profits.

There are many tables in the book Path to Financial Freedom . They form an understanding of how this complex process of interest actually works. Let’s look at the amounts relevant to feeling financially secure, according to Bodo Schaeffer.

First, in order to calculate financial security, you need to take an indicator of your monthly expenses. And multiply it by half a year, that is, by 6 months.

Expenses/month*6 = The amount of your financial security.

Secondly, in order to achieve financial independence, and learn how to get out of debt, you need to multiply your monthly expenses by 150. Why is this being done? If you take this amount and make a deposit at 8% per annum, then every month you can receive an amount equal to the amount of your expenses. Thus, your capital will remain unchanged.

Expenses/month*150 = Your financial independence.     

Thirdly, if you are aimed at achieving financial freedom, then the monthly profit is multiplied by 150.

Desired income*150 = Financial freedom.

As a result, you reach your goal.

How to pay off debts: rules

• Set a long term goal. First of all, try to focus on achieving it. Each step should bring you closer to its realization.
• Write down all your income and expenses. And plan your budget for the future accordingly. Set a spending limit and a minimum monthly income. If you are an entrepreneur, pay yourself a salary based on the minimum turnover of the company. It disciplines. In the sense that every month you learn to manage with some n-th amount of money. Of course, this is an excellent solution for competent budget planning.

• To understand how to pay off debts, write them down. Always try to negotiate installments with creditors. Or improve current payment terms. Strive to express your thoughts specifically. People always like honesty and frankness. So then they will be more willing to meet you halfway. As a result, you will get useful acquaintances and connections.
• Financial specialist Bodo Schaefer describes how to get out of debt. Try to imagine that the loan you need to repay is not now. And it should have been some time ago. How to be in such a situation? Where to get the source of income? Debts, debts, debts. This word also has a positive side. Financial commitments can be turned into an incentive for development. Constantly be on the move. Look for new projects. Find additional ways to earn money.

• Imagine the worst scenario. What can happen if suddenly you do not pay off your debts on time? It’s OK. In extreme cases, overpay the bank interest or penalties. Bodo Schaefer’s debt advice says that even in such a critical situation, there is no need to despair. The main thing to remember is that life goes on anyway. And yet, many successful stories began with financial disasters. Compared to that, how big is your problem?

• Break the habit of complaining. And always try to maintain self-respect. After all, opportunities attract winners. Therefore, many say that initially everything depends on the mood, as well as plans for the future. What ultimately determines the future life of a person.