Debt Destroyer® Workshop

Welcome to the United States Navy Debt Destroyer® Workshop! This course is designed to empower you and your family to get out — and stay out — of debt. You will learn proven techniques to overcome your high interest rate consumer debt, make the most of the money you have coming in and get on track to a more secure financial future.

Overview

This Debt Destroyer® Workshop consists of six steps. Each step includes a video explanation and activities you will need to complete. The six steps are:

1. Stop the Bleeding
2. Build a Safety Net
3. Confront Your Debt
4. Know Your Cash Flow
5. Adjust Your Cash Flow
6. Pay It Down!

Preparation

Whether you are completing this workshop on your own (self-paced) or in person, you will need the following items:

1. List of all creditors (include all loans, lines of credit and credit cards) with the following information:
1. Balance due
2. Due date
3. Minimum monthly payment
4. Annual percentage rate (APR)
2. Accurate details of your income and expenses. Reference your Leave and Earnings Statement (LES), other sources of income, mortgage/rent, utilities, groceries, entertainment, etc.
3. Debt Destroyer® Workshop materials:
1. Participant Guide: Download and print this file or order a printed copy from the Debt Destroyer® Workshop Resource Center.
2. Debt Destroyer® Tool: Download to your personal computer.
3. Debt Destroyer® Online Calculator: Mobile device friendly tool
4. Internet connection to stream videos
1. Watch this
   introductory video.

This course is available to you right here, right now and right at your own pace. We provide the videos and tools you need to get started, but you'll need to gather some documents and be prepared. This is a WORKshop. You know what that means.

As you work through this six-step program, know you are not alone in this journey! The Personal Financial Managers (PFMs) at your local Fleet and Family Support Center (FFSC) or the Command Financial Specialists (CFS) at your command are available to assist you. Locate the closest Fleet and Family Support Center to you.

Call your FFSC to register for an in-person Debt Destroyer® Workshop near you!

Understand Your Motivation

Two primary motivators tend to drive most people wanting to take control of their debt: the avoidance of pain or the achievement of something important. Viewed another way, negative emotions or positive emotions. Which better describes you? Is it both? Whatever your motivation, you'll have better odds of succeeding if you take a few minutes before diving into the work and really think about, then write down, your top drivers for wanting to make this change.

What are your top three motivations for wanting to take control of your debt? Write them down.

Keep this list handy as you move through the six steps of the Debt Destroyer® Workshop, and review it frequently as you work your plan. Once the real work starts, it will be important to regularly remind yourself why it's important for you to gain control of your debt.

Imagine Your Future

Getting control of your debt and becoming more financially secure usually takes a while, and during the journey, it can be hard to stay the course if you don't have a clear image in your mind of where you're headed.

Take a few minutes right now to think about your future. Imagine how your life will look after taking action and putting in the work. What has changed? How are things different? Write down your vision of the future with no debt.

Now that you know your motivations and have a vision for your future, make a commitment to yourself and your family to put in the work and complete the steps of this workshop. Print your workbook and let's get started.

Step 1: Stop the Bleeding

Key Points —

• Survive this step by Evading, Resisting and Escaping new debt.
• Evade new debt by paying with cash only.
• Resist the temptation to take on new debt by identifying and changing problematic behaviors.
• Escape late fees and penalties by making payments on time.

Activity 1: Financial SERE Training for Your Debt

Now it's time to put your financial SERE training into action. Reflect on the decisions and behaviors that led to your current debt situation. Then, brainstorm strategies to "Stop the Bleeding," and commit to implementing at least one strategy per category. How will you evade, resist and escape? Write it down.

Resources: Check out the Resources section of your workbook for tips and strategies to assist you with each step of your Debt Destroyer® journey.

When is the last time you saw your credit report? Page 13 of your workbook shows how to request a free copy of your credit report and where to sign up for free credit monitoring. Do this. It’s really important. If you have questions, call your CFS or PFM.

Step 2: Build a Safety Net

Key Points —

• Build a safety net of $1,000 to pay for emergencies.
• Understand a true emergency fund is typically three to six months of living expenses, but when getting out of debt, $1,000 will cover many financial setbacks.
• Do not borrow to build this cushion.

Activity 2: $1K Savings Sprint Strategies

If you don't already have one, it's time to get your emergency fund started! Come up with a plan to get at least $1,000 in a savings account as quickly as possible. Think about what you have available or what you can do to bring in extra money right now. List three things you will do to accumulate a $1,000 safety net as soon as possible.

Resources: Check out the Resources section of your workbook for tips and strategies to assist you with each step of your Debt Destroyer® journey.

Need a little help getting started? Check out "Tips for Building an Emergency Fund" on page 14 of your workbook.

Step 3: Confront Your Debt

Key Points —

• Analyze and record the balance, minimum payment and interest rate of each of your debts.
• Strategize ways to minimize the cost of your debt. Speak with whom you owe. Seek an interest rate reduction, explore a balance transfer and research the Servicemembers Civil Relief Act.

Activity 3: Debt Details Scavenger Hunt

Now it's time to get this mission organized. In this next activity, you will go on a scavenger hunt through the statements you gathered in preparation for this course to uncover the details of each of your debts and record them in your workbook. We will be using this information again in Step 6.

Resources: Gather all your loan, line of credit and credit card statements. This includes car loans or any other leisure vehicles that you do not own outright. Be sure you write down all five details of all your debt (creditor, type of debt, current balance, APR and minimum payment).

Learn more about the Servicemembers Civil Relief Act, "Tips for Minimizing the Cost of Debt" and strategies for "Communicating with Creditors" in the Resources section, beginning on page 15 of your workbook.

Step 4: Know Your Cash Flow

Key Points —

• Update or create your spending plan.
• Document all your inflows and outflows for the last 30 days.
• Reduce expenses and, if possible, earn more.

Activity 4: Start Your Spending Plan Worksheet

For this activity, you'll need the Spending Plan Worksheet on pages 11-12 in your workbook and/or the Spending Plan Worksheet tab on the Debt Destroyer® Tool.

Complete the LEFT column. Reference your most recent Leave and Earnings Statement (LES), pay stub (civilian employers), bank and credit card activity or statements to complete this exercise.

Once you complete the left column, check your results. If your Spending Plan Worksheet shows a monthly surplus, but your bank account does not confirm this result, go back and review all your inputs.

Resources: You may need to track expenses to get a better idea of what is coming in and going out.

Use "Track Your Expenses" on page 23 of your workbook to get a better handle of what money is coming in, what money is going out and where that money is going.

Step 5: Adjust Your Cash Flow

Key Points —

• Determine how much extra cash you'll need to pay down your debt.
• Decide where that extra money is going to come from (make more or spend less).
• If cutting expenses is your plan, target variable expenses first.

Activity 5: Complete Your Spending Plan Worksheet

For this activity, please refer to the Spending Plan Worksheet and complete the RIGHT column, looking for places where you think you can reduce spending and free up money to put toward paying down your debt. We'll call this "new" money Debt Destroyer® Dollars and refer to it in Step 6.

Once you complete the right column, review the spending categories with the largest values. Do these categories truly reflect your priority to pay down debt? If certain categories, such as vehicle payments or housing, are too large to allow for debt reduction, then changes to these expenditures may need to be considered.

Resources: PFMs at your local FFSC are available to help with a wide array of personal financial matters. For additional assistance on cash management and budgeting, attend the Developing Your Spending Plan workshop offered through the FFSC. Locate the closest Fleet and Family Support Center to you.

Step 6: Pay It Down!

Key Points — This is it! This is where you evaluate and decide which payoff method you will use.

• Avalanche Method prioritizes applying extra dollars to the highest interest rate debt first, while paying minimums on all others
• Snowball Method prioritizes applying extra dollars to the lowest balance debt first, while paying minimums on all others

Activity 6: Use the Debt Destroyer® Tool

Complete the Debt Destroyer® Tool using the data you collected in Step 3 and Debt Destroyer® Dollars you uncovered from Step 5.

After reviewing each strategy, select yours and complete the "My Plan of Action" section below.

Note: Debt Destroyer® Dollars can be a one-time payment (tax refund) or the money you "find" in Step 5 by cutting expenses or increasing income.

Now that you have completed Steps 1-5, it's time to put your plan into action! Determine your plan of action by reviewing both avalanche and snowball methods of debt repayment. Each plan will show you the exact date that you will be DEBT FREE!

Write down your Plan of Action in your workbook on Page 8.

Final Thoughts

Congratulations! You now have a plan for gaining control of your debt and even a date when that will happen, if all goes according to plan.

Now, the real work begins!

Your success as a Debt Destroyer® will depend on staying committed and sticking with your plan through the inevitable challenges that are bound to come your way. Refer to the Resources section of your workbook for more information. Here are a few tips to help you succeed on your journey:

• Revisit your motivations.

• Begin implementing your SERE plans to Evade, Resist and Escape new debt.

• Build your $1,000 safety net.

• Contact your creditors.
• Implement your new spending plan.
• Find an accountability partner.
• Set Debt Destroyer® calendar reminders.

For PFMs ONLY:

The Debt Destroyer® Workshop Support Center features wallet cards, participant workbooks and DVDs for PFMs to order.

For a live workshop, please download and use the Debt Destroyer® Workshop presentation.

DISCLAIMER: The strategies presented in this Debt Destroyer® Participant Guide are not intended to be or to provide financial, tax, investment or legal advice. They are only a general overview of the subject presented and are provided solely for your information. Applicable laws are complex, the penalties for non-compliance may be severe and the applicable law of your sate may differ. Consult your tax and legal advisers regarding your specific situation.