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How to Pay Off Debt in 3-7 Years | Expert Tips From Shred Method's Adam Carroll

Written by Hannah Locklear
Last updated on May 1, 2026

Summary: Drowning in debt? You don’t have to stay there. Adam Carroll of The Shred Method reveals how everyday people can pay off debt in record time, sometimes in just a few years. Learn how to use behavior-based strategies, optimize your cash flow, and redirect your money with purpose. Already facing collections? Solo can help you respond to lawsuits and settle your debt for less.

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From debt statistic to financial educator

Before Adam Carroll was teaching others how to achieve financial freedom, he was struggling with debt himself. Coming out of college, Adam had racked up his own share of college credit card debt and student loans and quickly realized he could barely make ends meet. That wake-up call launched a personal journey into financial literacy.

He immersed himself in money management, began applying what he learned to his own finances, and soon discovered that the path to debt freedom wasn’t just possible, it was surprisingly simple. Since then, Adam has spent more than 20 years educating others, creating documentaries, publishing books, and building a tool to help people shred their debt just like he did.


What is the Shred Method?

What if you could get out of debt in 3–7 years, including your mortgage? That’s exactly what Adam teaches through The Shred Method, a software and coaching platform that helps people change their financial behavior and crush their debt faster than they ever thought possible.

The secret isn’t magic, it’s strategy. The Shred Method shows users how to redirect income and make smarter, more targeted payments. The software tells you when and where to apply payments so that more of your money goes toward principal instead of interest.

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Credit card payment estimated at 24.99% APR over 60 months. Settlement estimate based on industry averages. Actual results vary.

A Shred Method success story: 25 years of debt gone in 8 months

One Shred Method user and his wife had been paying off student loans for 25 years. After joining the program, they eliminated the final $45,000–$50,000 of student loan debt in just eight months.

The difference? In the 23 years prior, 83% of their payments went to interest. With The Shred Method, 98% of their payments went straight to principal.

From there, they tackled their mortgage, recast the loan, and cut monthly payments dramatically. With no student loans and a much smaller mortgage, they suddenly had room to save and invest, even without increasing their income.

What’s the difference between the Shred Method and budgeting?

Most people operate on a simple cycle: money comes in, sits in checking, and slowly leaks out to bills, loans, and impulse spending. The Shred Method flips that model. Instead of letting money sit idly, you use it strategically through a line of credit to knock down your highest-interest debts first.

It’s not about spreadsheets or budgeting apps. It’s about behavior change.

And don’t worry, you don’t need to live on beans and rice. You can have nice experiences, even while budgeting and getting out of debt. Adam says the goal isn’t to cut all joy from your life. It’s about intentionally redirecting money where it makes the most impact.

Adam believes, “if you do for two years what most people won’t do, you can do for the rest of your life what most people can’t do."

What if you don’t have extra income?

Shred works best if you have at least $100–$500 left over each month after bills. If you’re living paycheck to paycheck, it may not be the right time, but Adam suggests focusing on both offense and defense:

  • Offense: Can you ask for a raise? Pick up a side gig? Increase income even slightly?
  • Defense: Can you re-shop insurance or cut monthly costs?

Freeing up even a few hundred dollars a month can dramatically speed up your debt-free timeline.

Should you use savings or retirement to pay off debt?

Listener questions poured in, including one about whether to use $24,000 in a 401(k) to pay off $12,000 in credit card debt. Adam’s answer? A firm no. That retirement money is already working for you, growing with compound interest. Instead of pulling from long-term savings, he recommends using smarter cash flow strategies, like The Shred Method, to eliminate high-interest debt while letting your investments continue to grow.

Another listener asked about sitting on $40,000 in savings while holding a mortgage and car loans. Adam’s advice? Be strategic. First, ask: how much do you really need in savings to feel secure? Keep enough in reserve to sleep at night, but consider using some of that cash to knock out high-interest car debt. That frees up monthly payments and builds momentum. Accessible money matters, but not all of it needs to sit idle in checking.

In both cases, Adam encourages a shift in mindset: protect your long-term gains and maximize what your dollars are doing today. The goal isn’t just to pay off debt, it’s to own more of your money.

What about debt settlement?

If you’re trying to settle accounts that are already in collections:

  • Always respond to lawsuits first to avoid default judgments.
  • Consider asking for a pay-for-deletion agreement before sending payment.
  • Start low in your negotiation (40%–60%) but be realistic.
  • Don’t be afraid to share your financial hardship, it may help.
  • Expect multiple rounds of negotiation.

Respond to debt collection lawsuits fast with Solo.

Final takeaways: Your money, your future

Most people wonder where their money goes. Shredders know exactly where it's going, and they take control of it.

Whether you’re just getting started or already deep in debt, the key is to stop playing the bank’s game. Stop paying mostly interest. Start using your income to build wealth.

Visit TheShredMethod.com to run the free savings calculator or connect with a coach. Want a no-phone-calls-needed way to resolve debt in collections? Check out SoloSettle.

You can do this. And Solo is rooting for you.

Transcript

Hannah (01:36):

Hey everybody, thank you so much for joining this episode of the Debt Hotline. We're super excited for today's topic and our special guest and thank you everyone for listening, for watching for submitting your questions to the debt hotline. We've got some great questions queued up for this evening, so we're excited to jump into things. The topic is shred your debt and build your wealth, and we're going be discussing some of the fastest ways to pay off your debt. We've got a financial expert here joining us tonight, Adam Carroll, and I am going to read a little bit about Adam and give you a little bio about him. So Adam Carroll is a nationally recognized financial educator, keynote speaker, and the founder of The Shred Method, which lends itself well to our topic for tonight, which is Shred Your Debt and Build Your Wealth. Adam is and the Shred Method to give a little bit more information about that.

It's a software and a course that's designed to help people accelerate their debt payoff and achieve financial freedom faster. Adam has more than 20 years of experience teaching financial literacy and he has spoken at more than 1000 live events. He's authored multiple books including Winning the Money Game, and he even created a student loan debt documentary that aired on CNBC called Broke, busted, and Disgusted. Two of his TED Talks have gone viral and reached more than 6 million views and he's been inspiring audiences worldwide to rethink how they manage money. Adam's mission is to help people build a bigger life, not a bigger lifestyle that he's passionate about sharing the mindset, habits and tools to make that happen. He joins us tonight on the Debt Hotline to break down how everyday people can shred their debt and take control of their financial future. So Adam, would you take a moment to just say hello and fill in any gaps that I might've missed in your bio and tell us a little bit about yourself and the Shred method?

Adam (03:35):

Yeah, thank you Hannah, and thanks for the invite. I appreciate everyone's time and I love this topic. I mean, I think part of my background that I have to share right off the bat is I'm a money nerd and so when the Money Nerds unite, we have really fun conversations around stupid things like interest rates and amortization tables and things like that. I think what's important for the audience to know is I've been doing this for 20 plus years, but what really started it for me was I was a debt statistic coming out of college and I had borrowed a lot of money on student loans and credit cards and realized the error of my ways really early on when I could barely afford to make ends meet and then got really serious about teaching myself about money and practicing what I was learning. And so in the process of doing that, I realized it's not that hard. It's relatively simple. What if I went out and taught it? And so I started on this path of educating people all over the globe about how to manage their money well and ultimately how to shred debt, build wealth, and as you put it, build a bigger life, not a bigger lifestyle.

Hannah (04:50):

I love that. Can you tell us a little bit more about how the Shred Method works for a typical user, what they could expect if someone were to go to the shred method.com and enroll in the program and use the software? How exactly does it work?

Adam (05:06):

Yeah, great question. The Shred Method itself, as you alluded to it is a course where we teach you the ins and outs of how the system works. It is also a piece of software that I like to call a behavior modification tool because candidly, the reason that most people are in debt is a behavior issue. We're using credit cards, we use loan products and sometimes we don't use 'em the right way or we're using 'em to an extreme. And so what we do through the Shred method is we teach people how to optimize the cashflow that's coming through their household. And what I mean by that is most people, they have money that comes through their door, it goes into a checking account and it sits there idly sometimes for days or weeks or months. In some cases, all the while they're paying really significant interest on other debts.

And so what we do through Shred is we teach people in what priority order do we knock those debts down and we use a really unique but ever present tool. Anyone can get one of these, we call it a shred account, but it's an effectively a line of credit and through our system, income is deposited through the line of credit and our software will tell you based on how much you have coming in and going out, drop this amount on this debt and this amount on this debt on certain days and what the end result. What happens is debt just seems to melt away and the majority of people we work with, Hannah could be completely out of debt, mortgage included within three to seven years.

Hannah (06:42):

Incredible. So can you give us maybe an example, you don't have to give names. I know this is all confidential information. You are dealing with finances and debt, but could you give us maybe a success story of a recent Shred Method user who used your platform and was able to manage their debts better and pay things off faster?

Adam (07:01):

Yeah, I mean there are so many I could choose from, so I'm going to give you one and then maybe we can circle back and do another one here in a bit. There's one shredder in particular who is just a standout and a really, he's such a great success story. He and his wife had been married for 25 years and they had had student loan debt, the entirety of their marriage. So when they got married, they had student loan debt, they were approaching their 25 year anniversary, still had student loan debt to pay off, and when he found Shred he said, listen, I just want to be out from under Sally Mae or Nelnet or whoever he was paying. And within, I think it was about eight months of starting the program, he had completely knocked out the remainder of his student loan debt and I want to say it was to the tune of 45 or $50,000 remaining.

And this is what was amazing about it, Hannah, he did the math and in 23 years-ish of paying the student loans, it was something like 83% of every payment he sent in went to interest over 23 years. And in the eight months that he was using Shred, 98% of every payment he sent in was going towards principal. So hence he was able to knock it out in short order. And after he was done with the student loans, he started going after his mortgage. He paid the mortgage down pretty substantially over the course of about a year. And then we advocate for a strategy called recasting where you don't necessarily have to refinance your mortgage, you just recast it. If you bring the balance down, you reach out to your lender and say, listen, I owed this much on a 30 year fixed mortgage when I started and I'm three years in and now I owe this much.

What would my new payment be if we were to recast the mortgage on the current balance? And so our goal is to kind of what I talked about before, build a big life, not a big lifestyle. So our goal is to continually decrease some of those lifestyle expenses so we can have a really big life. And this particular shredder, he lives this amazing existence now where he has a house payment in the about $500 range. He's paid all of his debt off, he has a good job, he's ready for retirement. And he said, point blank, I don't know that I would be this far along if I didn't follow this plan. So we have stories like that all the time. His is probably, I would say he's an extreme case in the sense that he is uber, uber disciplined and now he went through the program, but we've got countless stories of people who 24 to 36 months in are like, I never imagine life could be this way.

Hannah (09:49):

So it sounds like this particular gentleman and you call your users shredders shredder, it sounds like he went from paying off student loan debt for 23 years and it was all going to the interest and then he enrolled in the shred method. And he was able to pay off that student loan debt how fast?

Adam (10:08):

It was in about eight months.

Hannah (10:09):

Oh my goodness. It's crazy. And every payment once he enrolled in the shred method was being applied to the actual principal payment,

Adam (10:18):

Principal

Hannah (10:18):

Amount of the debt.

Adam (10:19):

Correct. And it's kind of a byproduct of some of our training, which basically says that the majority of people don't really own their income. So we make money if we're a W2 wage earner, we make our income, but the first thing we do is we pay taxes. The second thing we do is we pay all of our bills, which are bills. If we're financing a car and a home and maybe student loan debt and maybe credit cards, a vast majority of what you're bringing in every month goes out the door an interest expense. So we don't own a lot of that money that we make. And one of our very first lessons that we teach shredders is the goal of this is to own more and more and more of your income because if you get to a point where you can not only earn but own 80 or 90% of every dollar you make, imagine how powerful that is in terms of wealth building. And so instead of playing the bank or the lender's game where we make minimum payments over time, we're going to make lump sum payments and knock these debts out and eliminate the interest expense, which is basically the second largest expense that most people have in life.


Hannah (11:30):

I love that The interest is the second largest expense people have in life. So true. And I feel like if you can hack the system to find ways to pay off your mortgage or your student loan debt or those big debts faster, it just makes so much sense because then you really are owning the majority of your income. You don't have Sally Mae or the banks hanging over your head all the time. And I feel like the message of the shred method is really obtaining financial freedom and that's what you guys help people do. Thank you so much for the little explanation, Adam. We really appreciate it and I really admire what you're doing. I feel like you explained it very well too, and I think that's part of the work that you do at the Shred method, Adam, is you are educating people in an easy way to understand. Because at the beginning we were talking earlier, you said you're a finance nerd and not everyone is, I myself, I tend to have my eyes glaze over when I'm talking about finances super deeply.

Adam (12:34):

Totally.

Hannah (12:35):

And there's nothing wrong with being one way or the other, but I think it's so important that you're making these topics accessible to people who might not find it super fascinating or interesting. And so I just love that you're educating people in an easy to understand way about these topics.

Adam (12:52):

I appreciate that, Hannah. It's one of the things that I think early on when I started in this industry, money can be a complicated topic, and certainly it carries with it all sorts of emotional baggage that people have adopted or absorbed from the environment in which they grew up. But what I wanted to do was make it simple. And that's one of the things about the course and the community that we've created and the software is it is easy to follow. It's not rocket science. It's telling you what to do day by day, week by week. And what we found is that I mentioned the software as a behavior modification program. The only reason I say that is most of us are raised in a banker or a lender's business model. If we want to buy something, well, we are going to pay for it over X number of months or years, and we never really think twice about how much of that payment is going to interest and could I afford to pay more?

Would it make sense to pay more? So we have this theory that I want to share with you. It's kind of a motto or a mindset that's basically if you do for two years, what most people won't do, you can do for the rest of your life, what most people can't do. And for two years, we're asking most people, Hey, for 24 months, can you focus on knocking down some of these debts and building a really big life for yourself? And if you do, it's amazing what opens up on the other side, like the success stories we have of people who have either blast away student loans, car loans, credit card debt, but then when they start knocking down mortgages and not just one but multiple, what's opened up for them is the power of investing at a really high scale, not 200 or 300 or 500 a month, but a lot of these folks might put away thousands of dollars a month or 40 or $50,000 at a time and not on crazy incomes.

And I'll say, what is it like for you to do this? And typically the answer is, I never thought it was possible because we're operating in a system that it gets very similar results. And unfortunately that result for most people is they're going to get to age 55 or 60 and wake up one day and go, oh my God, do I have enough set aside or is that big shiny pile of money enough to last me for the rest of forever? And we tend to look at it a little bit differently, and by doing so, you're going to get a different result.

Hannah (15:29):

I think there's a lot of power in taking time upfront to address your debt and like you said, spend two years being frugal, being really conscious about where you're putting your money. Then the rest of your life, you can kind of have that flexibility that I think we're all searching for that for

Adam (15:46):

You. Yes.

Hannah (15:47):

Well, I love that.

Adam (15:48):

Totally.

Hannah (15:48):

Well, Adam, thanks so much for taking a minute to explain about the Shred method. Again, if anyone's interested in learning more, you can go to www.theshredmethod.com. I wanted to say that although Adam is an expert in this space, and I also am very well versed in debt, especially when it gets to debt collection and legal debt, we're not attorneys. The information that we share in this podcast episode is purely educational. It won't necessarily apply specifically to your case, especially if you're dealing with legal issues and debt. So I just wanted to give that disclaimer, we're not attorneys. These answers don't form an attorney-client relationship. Don't take it as legal advice, but hopefully it can give you some educational information, point you in the right direction and get you the resources that you need to find your debt solutions. So with that being said, we're going to go ahead and jump into a question that we got from a real Solo user.

Guest: Ry (16:51):

Hello, my name is Ry. I am in the state of Georgia. My debt question today is with reference to debt settlement, I wanted to know what would be the best strategy to use if I'm contacting debt collectors in reference to settling accounts. For example, I have different credit cards that have gone into collections. Some have been charged off. I would like to pay everything off. However, I know I don't have all the funds available, so I'm going to do this one by one, but what could I ask for? What could I state in order to get them to settle for a significant amount less than what is actually owed?

Hannah (17:38):

Great question. Great question. Okay. Do you have any thoughts, Adam? I have my own thoughts from the Solo’s perspective, but what would you say?

Yeah, we love handling conversations like this too, just to give people a little bit of perspective of what's possible. And I'm going to defer to your expertise on this a little bit, Hannah, but share one of the strategies that we've used and encouraged folks to use is to reach out to the collector. Obviously this caller one at a time is the strategy, which I think is the right way to go if you don't have enough money sitting on the sidelines to knock them all out at once. So if you're going one by one, reaching out to one of them and saying, listen, I've come into some money. I would like to settle this debt. It's not going to be the full amount that's there, but I'd like to negotiate a pay for deletion letter and the PFD or pay for deletion strategy is once you've negotiated that payoff before you ever send any money in, get a letter from that collector or debt servicer.

And essentially the letter is saying, if you agree to pay this amount, we will delete that collection item from your credit report. We've asked a number of times for these pay for deletion letters, gotten them maybe 60 to 70% of the time. There are some that will say absolutely not our policy, but it never hurts to ask for one of those. And if they're coming back and say, no, it's the full amount or nothing. In all reality, the debt collectors, and perhaps this is some of the education you guys provide, Hannah, but these debt collectors have bought your debt for pennies on the dollar. So if you owed $10,000 in a credit card on a credit card and a collection agency has procured that debt, they have probably spent maybe somewhere between 500 and a thousand dollars to buy maybe $2,000 on the high end to buy the debt from the credit card company to then go collect from you the user, the original grantor of the debt or grantee of the debt.

Excuse me. So the logic behind that is if $10,000 was the original balance that was owed, and maybe there's some interest in penalties and things like that on top of it, I would find out where is the watermark of where they're willing to start negotiating? Because in all honesty, a debt collector may be totally happy doubling their money. If they paid two grand for your debt, maybe they'll get four. We got to figure out where is that line. But no, right upfront when you're negotiating a settlement like that, there likely is an amount that they've paid for that significantly less than what you actually owed on the debt itself.


Hannah (20:31):

Yes, and to add to that, I think there are a lot of factors that play into your debt settlement decisions. But the number one I think would be ask yourself who it is that you owe at this point? Is it the original credit card company that's suing you? Is it the bank or is it one of these debt collectors or a debt buyer that purchased your debt for pennies on the dollar? If you're dealing with a debt buyer, there's a chance that they may accept a lower amount to settle the debt. Actually, there's a very good chance, and if you're dealing with the bank, the original bank that lent you the money, it might be harder to settle for less, but if you can show them that you have some sort of real reason for not paying the debt, or you can explain, maybe you lost your job, maybe you had health issues, maybe you lost a spouse or a family member, and it's resulting in some financial struggles, if you can prove to them that there's a legit reason why you haven't paid back, that will also play into your negotiations.

But I think that as far as strategy goes, it's good to start low, never offer something that you can't realistically afford. So maybe for example, if you're dealing with a debt buyer, they purchased your debt for a percentage of the original amount, again, they may be willing to settle for less because they'll still probably get a profit if you pay a percentage of the full amount. So you could maybe start off, a lot of attorneys that we've worked with at Solo recommend somewhere in the 40 to 60% range. In our experience, usually 60 to 80% might be a little more realistic, but again, you can start low, maybe somewhere around 40 to 60% of whatever the debt amount is and see what they say and don't expect them to accept your first offer. Don't get discouraged if they say no upfront, don't give up. But I think the key is to communicate with them, explain your situation, be ready to go through several rounds of negotiating before you come to an agreement.

And yeah, don't get discouraged because that's very normal. It's a part of the process. They may ask you to submit your financial information or in many cases, they may already have access to your financial information. They may already know how much that you make each month. And so don't lie. The important thing I think is to communicate and be honest. I think a lot of the time we can kind of paint out debt collectors to be the enemy, which we do have the occasional rogue debt collector that's going to harass you until you pay your debt. But that's actually against the law. So most debt collectors are trained to be compliant and to treat people with respect when trying to collect a debt. So just know that they're human beings too, and they are willing to work with you. Another thing I would add is it also depends on what stage of the collections process that you're in.

So if you've been sued for a debt, the number one thing that you want to do is respond to the lawsuit because failure to respond will probably lead to big consequences. Like you'll automatically lose the case. Your wages could get garnished, you could have lien put on your property among other things. So that's worst case scenario, right? So be sure to file an answer even if you know that you owe the debt, file your answer and then consider that'll buy you time to figure out your next steps, right? Yeah. And then lastly, I would just say we have tools at Solo to help with this process. For example, our tool called SoloSettle is a negotiation platform. It's built on ai, so it helps you negotiate with creditors, debt buyers, debt law firms, and it helps you settle your debt for less. We see people settle for as little as 30% of their original debt amount.

Usually I would say it's probably closer to above 50%, but even still being able to save a little bit can make a huge difference. So head on over to solosuit.com if you're interested in figuring out more information about how to negotiate. We have a lot of resources on our blog about negotiation strategies and tips from real attorneys, and we have that platform that you can use SoloSettle to negotiate, do everything digitally online without having to wait on hold, play, phone tag, go to the court house, all those things, digitizes the settlement process for you. Anything else that you'd like to add, Adam?

Adam (25:06):

Well, as you were describing what to do, one of the things that comes to mind is, again, if there's been a suit filed is to share hardship. And you alluded to it, but I think some people are maybe not as present to the hardships they have or willing to share what they are, but in my estimation, if you're negotiating, dial up the hardships that you're experiencing right now. If there's family medical emergencies or there's been an accident or a job loss, really share the details of that and how impactful that has been on your finances because as Hannah said, these people are trained to be empathetic and their goal is to collect money. That's their job not goal. That is their job is to collect those funds, but they're going to do it in a way that hopefully still has a human side to it. And I know a lot of folks in collections with banks and credit unions, and they're really good caring people. They'll take someone's situation back to the senior level folks who are going to make the ultimate decision it provided. There is impactful hardships at play.

Hannah (26:18):

Yes, and to add to that, the debt collectors, they will work with you, but oftentimes they have specific set amounts that they can't go past in terms of settling. So it might be that the bank or whatever has set a limit and they literally can't accept a lower amount. And so just be aware that depending on the factors of your case, your debt situation, the amount that how delinquent the debt is, they're going to have an algorithm that they use to determine how much they can realistically accept for settlement. So really the trick as a consumer is to figure out that sweet spot. And it may take many rounds of negotiating to find that because that information is proprietary and totally private. And yeah, we're not going to have access to that as consumers. So just be willing to negotiate and engage in those conversations. But know that there are tools like the shred method.com and solosuit.com that can help you through the process. Let's see. We've got another question. This one was submitted from Melissa from Arizona, and it says, my husband and I have about $140,000 in mortgage left with $18,000 in credit card debt. We're making the payments, but we feel like we're stuck. Can the shred method help us get ahead even if we don't have a lot of extra income?

Adam (27:44):

That's a great question. Here's what I would say, Melissa. The first step in our process is to figure out, number one, what is the interest rate on the credit card debt? So if you're facing 18, 19, 20 plus percent interest rates and you've got maybe a little bit of extra room on the equity of your property as an example, one of the things we do is shred is figure out how quickly could we knock the credit card out or down? Ideally it would be knock it out completely to save the amount of interest that's being levied against you on that. So shred typically works for someone that has somewhere between a hundred and $500 or more leftover at the end of every month. If someone's really living razor thin margins, paycheck to paycheck, it's harder to see the level of success with Shred. So we then focus on a couple of things.

One is, can we play better offense? And what I mean by that is can we increase your income? Have you asked for a raise recently? Are there other ways that you might be able to earn a little bit of extra money, take an extra shift here or there? I mean, the common examples would be drive Uber one day a week or two days a week and pick up some extra money that is specifically used for Shred. It works really, really well if someone has that 200 to 500 or more range in discretionary income every month. And in doing that, we could show you how to knock this thing out in no time. But what I would say is the short answer to your question is yes, and the best bet is to go to the shred method.com. In the upper right-hand corner, there's a savings calculator tool.

And if you just plug your numbers in, the system will tell you how quickly you could knock things out. And then we'll also offer a 20 minute call with one of our coaches and they'll literally go through your numbers and say, either this is right for you or it isn't. And if it isn't, they'll say, here's some ways that you might be able to play better offense, make more money, as well as play better defense, which might be how do we reduce some of our monthly expenses that are out there right now? And I'm talking about things like go out and reprice or re-quote your car insurance, your homeowner's insurance if you're a renter, your renter's insurance. The reality is that there are companies out there that are trying to buy up the market in the insurance world. So if we could save, I don't know, a hundred, $200 a month, which is not out of the ordinary by switching to a different insurance provider, then we free up a little bit of extra cash we can use for Shred and show you how to knock out the credit cards and then begin knocking down the mortgage.

So it's a roundabout answer, but what I'm going to tell you is I think we probably could provided there's enough discretionary income, and if there's not, we'll give you some ways to create more that it might be able to work for you.

Hannah (30:50):

Great. Alright, our next question is from Jamie In Ohio, it says, my student loans are killing me. I want to save for retirement. Should I focus on paying off the loan first or should I start investing?

Adam (31:03):

This is the age old question, Jamie, and I can tell you what gurus will tell you. The gurus will tell you that you should immediately begin saving right now and put as much as you can in investment today because of compound interest and the long-term growth and all of that. And I don't disagree to a certain extent. However, I also think that the way most people have set up their student loan payments, the majority of their money is going straight to interest. None of it or very little of it is going to principle. And so if they're killing you now and we set up a plan where you're just making minimum payments on your student loans and putting a bunch of money in investments, the mental wear and tear of that will get to you over time because it will feel like, much like the story I told you earlier of our shredder who paid off his student loans, I mean it was 23 years of paying before he got him knocked out.

And candidly, the average student loan debt takes 21 years to pay off and it will cost you at least double if not more, of what you borrowed originally. So my 2 cents would be this, and I go back to the question previously as well about can I pay these off? It's an offense defense question, can you make a little bit of extra somewhere else that is 100% earmarked towards the student loan debt? And in doing so, set a plan and just go after student loans like it's your job to do so because knocking those down or knocking them out will help free up enough money for you to invest for the future. And I'll tell you that from my perspective, the folks that we help with Shred, when we reduce their debt load and we increase the amount of discretionary income they have, they find that their investment accounts grow exponentially faster than if they're just putting 50 or a hundred dollars a month away at a time. You can imagine it just takes forever to build that mountain. I go back to the statement I made a little bit earlier. If you do for two years, what most people won't do, you can do for the rest of your life what most people can't do. So I would get really aggressive and I would knock those student loans out as soon as humanly possible. That's my 2 cents.

Hannah (33:29):

Yeah, student loans suck if we're being honest.

Adam (33:31):

They do,

Hannah (33:33):

But hopefully you're in a position where that education did get you into a job that is earning you good income, and I agree. I think knocking out that debt so that you can then in the future own your income and you don't have the banks hanging over your heads anymore, it's your money. I think that's super powerful. Okay, next question is from Carlos. In Florida it says We have a $300,000 mortgage and two car loans, but we also have $40,000 sitting in a savings account because I'm scared to invest. Is there a smarter way to use that money to pay down the debt faster?

Adam (34:16):

Yeah, this is a really interesting question, Carlos, and not uncommon for us when we start talking to shredders is they'll have a very similar situation to yours, A decent sized mortgage, 300 grand in Florida is actually pretty good. That's a good mortgage. It's reasonable, but a 300,000 mortgage in Florida, two car payments and then 40 grand sitting in savings, and I get the scared to invest, but I also would say, is that money sitting there as an emergency fund or are there emergency funds in addition to that, if the money is sitting there, 40 grand sitting there in savings because it allows you to sleep comfortably at night, I would say that it probably needs to stay there for a period of time. However, what I'll also share with you is we make a distinction within the Shred community. We make a distinction between available money and accessible money because some people like to have money sitting in account.

It allows them to sleep comfortably at night because it answers the question, if something went south, where would I go for the funds? And they know exactly where they'd go. They'd go to their savings account with Shred. When we make the distinction of accessible money, accessible money looks like potentially the equity that you have in your home, and most people, if you do own a home, hopefully you have a home equity line of credit, but you're using it the way that we would prefer you use it, not the way the bank prefers you use it if the bank is going to have you use it. They want you to go put an addition on your home or buy a boat or get an SUV or an RV and then make minimum monthly payments every single month. On that line of credit, what we teach you to do is you're going to use little small chunks of that HELOC at a time, and you're going to start chipping away at things like the car loans first, and we're going to knock the car loans down to zero, and I'm assuming that your car loans probably in the 300 to $500 a month payment range.

So if we can knock one of those down, it frees up three to 500 bucks a month in discretionary income, and then we start going after the other one. And if we knock the other one out, now you're at a thousand bucks a month in discretionary income, and believe it or not, that extra a thousand plus whatever you're already paying in your mortgage payment through the Shred Method would knock your $300,000 mortgage down really quickly. I mean, it's not going to be three years, but within three or four years, what you could do is you could recast the mortgage and have a much smaller payment on the mortgage itself, and then you're freed up to do some investing because you have way more discretionary income than you did before. So I get where you're at. The goal is not to lose the money that you have sitting there, but if I were in your shoes, I would determine how much do I need in savings to feel safe and secure in accessible or available money? And then can I create accessible money through that line of credit that you could tap into not a ton, but a little bit at a time to knock the debts out and then set yourself up for financial success? What I'll tell you is you're in a great situation, more than likely, but know that if you took the next three to five years and laid out a strategy and executed, you'd be an amazing financial situation for preparing yourself for retirement at some point.

Hannah (37:41):

Okay, I love it. We're going to hop straight to the next question just for sake of time. This one is from Angela, also in Florida. It says, my spouse and I make about $100,000, $110,000 a year combined, but it feels like our money disappears. How does the Shred Method actually help you see where your money is going and redirect it?

Adam (38:02):

Yeah, man, this is such a good question and it's funny, not funny, is the reality of our client base and our community. When people say, well, who's your avatar? Who is this for? What we tell 'em is a dual income couple, usually making over six figures together that own a home, but that at the end of the month, wonder where did all the money go? And the reason for that, Angela is most people, again, when they make their money, the money goes into checking. We deposit our income into checking, we pay our house payment, our car payments, our living expenses, maybe some of our debts, and then whatever is extra, whatever's left over, the gurus will tell us that needs to go to savings and investment. And some of us are okay doing that, but the majority of people, if they have any extra, the extra goes to Costco, target and Dining out.

That's where extra goes. And the reason the extra goes there is it feels good to have money sitting and checking, and I'm sure Hannah, you've probably felt this before. There is a surplus sitting there and it makes us feel good. It's like, I can go out to eat, I can buy the shoes I've wanted, I can go shopping for clothes. But when we do that and we spend somewhat unintentionally, there's no money left over to knock out the debt. So it just feels like, gosh, now I have this big hole. I have some nice things, but I have nothing really else to show for it. And so through Shred, one of the things that happens, Angela, is you're going to get really granular in where you spend your money and how it's being spent. And I'm not going to suggest that anybody go on a beans and rice diet.

That is not my intention. I want you to live your life. However, in the living of your life through Shred and using the software, you'll start to see like, oh, we're making these big lump sum payments on these debts and knocking them down, you'll go, well, do we really need to go out to eat tonight? We have food in the fridge. I know it's convenient, but I want to make another lump sum payment. And all of a sudden you start get really excited about the speed at which this is being knocked down, and you're going to get even more and more intentional about how you're spending money and where you're spending money. Secondarily, again, we've talked about it a couple of times on the show so far, but we want you to focus on offense and defense. So offense is how long has it been since you've asked for a raise?

How long has it been since you've figured out could you make more money elsewhere and maybe it's time for a job change or figure out with an advanced degree or an extra more CEOs behind your name, could you ask for more money at work? So we drive home that idea that if you feel like your income's limited, it's limited by the amount of times you're asking to increase your income. And so we're going to focus on that. We'll focus on defense, which is how do we decrease our expenses? I totally hear your scenario like making 110 KA year combined is good money, but if your expenses are kind of rising to meet that income, there's never really enough leftover to begin knocking those debts down where you can create more and more discretionary income and through shred weed teach you exactly how to do that.

Hannah (41:24):

I love it. Well, I think we'll go ahead and cover one more question if that's all right with you, Adam.

Adam (41:30):

Sure, sure.

Hannah (41:31):

So this one is from Scott in Washington. It says, I have about $12,000 in credit card debt, but also 24,000 in my 401k. Is it ever a smart idea to cash out retirement to get rid of debt, or should I use a method like yours instead?

Adam (41:48):

Here's what I would say to that, Scott, and this is kind of my candid answer to anyone who asks about borrowing money from retirement to knockout debt. My general feeling around this is leave the 401k in place because even with $24,000, that's a pretty good start on creating compound interest velocity where your money is starting to make money. And if you were to pull 12 grand out of that money ceases to make money in your 401k, and actually if you took a loan against it, it would cost you a little bit in the borrowing of that. My feeling, because of the number of people that we've dealt with who have some amount of debt, 12 grand is not an insurmountable number. I mean, we've had people who use shred who knock that kind of money out in weeks or a few months. It's not a crazy task to go about getting rid of that.

A couple of questions would be, how much is extra? Do you have a significant amount of extra discretionary income every month? And if so, can we help create a strategy that begins knocking that down right away? Secondly, do you have a home? Are you a homeowner? And if you are and there's a little bit of equity, I would 100% say use the shred method to do that as opposed to borrowing from retirement. But I also have found a number of people that when they start getting educated in what we're doing and they see things a little bit differently, the way we describe it to some folks is this is like the movie The Matrix and taking the red pill versus the blue pill. And when you take the red pill and you see how this works, it's hard to unsee how the world operates on debt and interest payments and never really keeping any of the money they're making themselves. So I get it's a stretch, but when you start going down the rabbit hole, it's amazing how eyeopening it can be.

Hannah (43:49):

I agree, and I think a lot of the time we convince ourselves that getting to a point where you're not just living paycheck to paycheck, but where you can actually invest your money and build wealth is so out of reach. But the reality is it doesn't have to be, even if you have five or 10 bucks left over at the end of every month, that is something that you can do to start saving, investing and building yourself a better future. And even making small, simple life changes or lifestyle changes to where you're eating out less or maybe splurging less, those are realistic things. Those are real things that you can do to get yourself in a better position. And I should honestly take my advice because I've been a little splurgy lately with eating out, and I know that there are better ways that I could be using that money and managing my money to build a better future for myself and also my family. I actually, Adam, if you have a minute, we got a couple other really good questions I wanted to bring up, if you don't mind.

Adam (44:50):

Sure, sure.

Hannah (44:51):

So this one is from Van Ester in Florida. The question is, should I pay charged off accounts? What should I do if I'm being sued by a debt collector? So Adam, do you have any thoughts on maybe the first question, should I pay charged off accounts? I think I could definitely speak to the second question of what should I do if I'm being sued by a debt collector? Any thoughts on paying off charge off accounts?

Adam (45:14):

Yeah, that's a hard one. I think it depends on what they're for and if it's a reasonable amount to just knock out and get off your credit, it's probably a good thing. So again, it's kind of an, it depends, Vanessa, I would say if we're talking about a vehicle, I mean, I've seen car loans charged off by the lender, but then it hangs over your head for a good long time. And so wanting to get some of those things knocked out might be a little more challenging. If we're talking about a 10, 15, $20,000 debt, if it is a charged off account to a credit card and it's reasonable, you can knock it out. I might ask for a pay for deletion letter, but it depends on how long ago it was charged off because that could trigger new findings on your credit report and impact your credit score a little bit. So I probably don't have a really cohesive, solid answer to that. Hannah, what's your thought on it?

Hannah (46:14):

Yeah, I think there are so many factors that play into that question of what debts you should prioritize. Should you focus on the ones that have already been charged off, or maybe the ones that you haven't defaulted on yet. I think that to the second question, what should I do if I am being sued by a debt collector? That's the debt that I would probably prioritize myself if I were being sued by a debt collector. I would want to get that resolved as soon as possible because ignoring it can lead to serious consequences. Like I mentioned earlier, you could get your wages garnished, your bank account could get frozen. With wage garnishment, you could get up to 25% of your income taken for each paycheck. And to me, that's a much worse scenario than addressing the debt, contacting the debt collector, seeing if you can get a new payment schedule set up to where you're not paying 25% of your income, but maybe even a hundred dollars a month to try to get back on track with that debt.

There are options out there, but if you've been sued by a debt collector, the first step that you always want to take is filing an answer with the court and sending a copy of it to the opposing attorney at solo. We can help you with that. Go to solo suit.com. You can create a customized legal response to your case and it's going to be customized specifically to your case and help you defend yourself. And take that first step towards resolving the debt without filing an answer. Again, you'll probably automatically lose the case, but filing that answer blocks that automatic loss and gives you the time that you need to work out your next steps and call the debt collector and have those conversations because without having that answer, that initial defense in place, they can just go ahead and move forward with the legal proceedings and then end up taking your money without you having any sort of controller say in it.

And again, I wanted to echo what I said earlier, that debt collectors are willing to work with you. They want to collect the money. And so if you are willing to engage and try to set up a new payment plan or settle the debt, or you have maybe some savings or maybe a family friend or family members offering to help you pay off some of the debt, having those conversations is really important. But again, file your answer to the lawsuit, send a copy of it to the attorney that's suing you, and then call the attorney to try to negotiate. Or you can use SoloSuit to draft and file your answer. We help you file it for you. And then you can use our SoloSettle tool to negotiate with law firms and settle your debt for less. And it's all digitized. You don't have to go to court, you don't have to call lawyers and maybe dig yourself into a deeper hole by saying the wrong thing.

We help you facilitate the whole process, so we help you represent yourself and we digitize it basically. So again, go to solosuit.com if you've been sued and be sure to file your answer and engage. We should probably go ahead and close. But Adam, I want to say thank you so much for taking the time to join today and for sharing all of your expertise and knowledge on this topic. If you have questions about debt, whether you're being sued or not, please go ahead and call us at the debt hotline. The number is 8 0 1 6 1 3 8 1 8 1. So please go ahead and submit your questions to the debt hotline. We want to hear from you. Adam, do you have any final words before we close?

Adam (49:49):

One of the things that I would mention is sometimes when faced with an amount of debt, any amount significant or insignificant, it can feel like, oh gosh, I'm never going to get out of this. And I really want to make sure that folks who are listening and whoever see this online that you're using different language with yourself about, I will find a way, I will get out of debt. The defeatist, I'll always have data, this is always going to hang over my head. It will perpetuate, it will keep coming back. And what I would encourage you to do is just stay resolved to the fact that you're going to solve it. And I think SoloSuit and what Hannah and her team do is an amazing solution. So applaud you for being here and listening and educating yourself on it. And I would say in addition to that, tag into some professionals who know what they're doing to make it easier on you. Don't try and go it alone. There's a lot of people out there who want to help you with this, and the folks at Solo are top of the list for me.

Hannah (50:52):

I love that. Thank you so much. Again, as a reminder, you can head over to the shred method.com to learn more about ways to pay off your debts faster, to build your wealth and position yourself to be able to own your money and not just constantly be paying off debt for the rest of your life. The shred method.com, that's a wonderful tool to use, and again, if you've been sued for debt or you were trying to settle your debt even before a lawsuit, head over to solosuit.com. We can help you respond, negotiate and settle your debt for less and save money. Thanks again, Adam, for joining. This is The Debt Hotline and good luck to everyone out there looking for debt resolution, resources and solutions. We know that you can do it, and Solo is rooting for you. Thank you so much.

Adam (51:39):

Thanks, Hannah.

Disclaimer: Theme information presented in this podcast is intended strictly for general informational purposes and should not be construed as legal, financial, or investment advice. Solo and its hosts are not licensed attorneys, financial advisors, or other certified professionals. While select guests may hold active professional licenses, their contributions are purely for educational thematic discussion. They're not delivering professional or personalized advice. Solo is not a law firm, does not offer legal representation and must not be relied upon as a substitute for professional legal counsel. It is also not engaged in debt, settlement, credit repair, or financial counseling services. SOLO provides self-directed software tools designed to support users in navigating their own legal and financial situations. Participation in this podcast does not establish an attorney-client relationship. Listeners are encouraged to consult with attorneys or licensed professionals for guidance specific to their circumstances. The opinions expressed by podcast participants are their own and do not necessarily reflect the views or official positions of Solo Suit Inc. Doing business as solo or any affiliated organizations.


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