Have you ever owed a significant amount of money and wished you could just walk away? Maybe you got yourself into debt by accident, bad planning, or just plain foolishness. Whatever the reason, you need to work towards getting yourself out, and that means taking some serious steps.
Each of us has experienced the highs and lows of life. Money problems can cause our emotions to spiral out of control, forcing us to borrow money or sell off assets or both to feel like we are moving forward. After years of this, it can become difficult to see any options but to continue with the same routine and hope that things will turn around.
There are many ways to get out of debt and be debt-free, but one of the easiest, most effective ways is to use the Rubber Band Method. You automatically pay off your credit card balances with the smallest minimum payment each month in the Rubber Band Method. The larger your balances, the more you pay off. So, as your debt decreases, more of your monthly payment goes toward paying off your debt. This method is highly effective, and it works for almost everyone.
What do we mean by the Rubber Band Method?
Michael Bethel’s Rubber Band Method is a method of personal finance that helps people get out of debt by cutting back on expenses.
What is the Rubber Band Method? It’s a systematists approach to eliminating debt. The idea is that you need to spend only about 40% of your income on debt and save for the future. To help with this, you need to cut back on other expenses that you can’t cut back on.
The Rubber Band Method (RBM) is a life strategy that helps people get out of debt by creating a lifestyle that works for them. It also helps them avoid making bad financial decisions. It is a proven method to help people stay out of debt and avoid financial mistakes.
Here’s how the Rubber Band Method works.
First, you set up a budget (I recommend Budgeting Made Simple by TJ Maxwell) and stick to it. You have to make the budget line item for the category where you spend your money most frequently—the one that you think of as your largest “spending account.” This may be a line item in your checking account, a credit card, an auto loan, or your rent or mortgage. Once you have that category, you can make a budget for each of your other accounts.
How Does the Rubber Band Method Help People Get Out of Debt?
To answer the question “How can I get out of debt?” there is a Rubber Band Method (RBM) concept. It’s a metaphor that describes the different stages of debt repayment.
The metaphor is simple: if you have a rubber band that is too tight when you release it, it will snap back. This is the stage where you owe money and need to pay it off. The rubber band is the debt that you have to manage and repay.
When you reach stage two, you will have a rubber band that is too loose. When the rubber band is too loose, it will slide back and forth. You owe money but can’t pay it off.
When you reach stage three, you have the rubber band that is just about to snap. You have the rubber band that is just barely holding the weight of your life on your shoulders. You are in stage three, and you are done. You just have to go through the hard work and the painful moments. Not only are you carrying the weight of your debt over your head you are also carrying the weight of your job, your kids, house payments, car payments, everything you do. Your job, house, kids, car payments are all procrastinated from stage one.
You have done it. You are not going to be able to deal with all of the stress anymore. You’re only a few steps away from freedom. You know what you need to do, and you’re ready to do it, but you’ve got to go through a lot to get it. You won’t feel like doing it, but you just need to do it. There are no shortcuts to freedom.