In this article, I talked about the 7 levels of building wealth. I discuss how financial gurus aren’t fully honest about where most Americans start their financial journey. 80% of Americans have debt and many of them are not starting from neutral, they’re actually starting their journey at a huge disadvantage. According to a Northwest Mutual survey, of the Americans carrying debt, many are spending a whopping 33% of their monthly income on debt service, not including their mortgage. Worse yet, 13% of Americans expect to be in debt for the rest of their lives.

In response to the reality of where most Americans actually are, I created my own levels of wealth. However, nothing I say in this or any of my articles counts as financial or legal advice. I’m not an expert of any kind, The content of this article is for educational and entertainment purposes only.

For some, the starting point of building wealth is Negative Zero, where they are deep in a financial hole.

To elaborate on what it means to be deep in the hole, here is an explanative example of a woman in this circumstance. The woman below does not make enough money to afford their life. Bill collectors are calling and her financials are in chaos.

The specific types of debt, savings, and net worth of someone at this level might look like the following:

Debt at this level:

• Has credit cards, medical, auto loans, student loans, and/or garnishments.
• Is carrying a large percentage of high-interest debt
• Has 50% or more debt-to-income Ratio

Savings at this level:

• Has no emergency fund
• Is likely to go into deeper debt if an emergency happens
• Is wasting lots of their money on fees (late fees, penalties, interest, etc.)

Net worth at this level:

• Has a negative net worth
• Has bad credit score
• Has limited or no access to additional credit.
• Is potentially un-banked.

How does someone at this level move up?

1. Take an honest look at your finances. Acknowledging the reality of your circumstances is a critical first step. You must know the scope of the problem in order to adequately address it.
2. Decide to do something about it. Do not keep running. Your debts will not disappear if you run from them. Additionally, if not careful they can be passed down to your children or other family members if not taken care of.
3. Earn more money immediately. Take on a side hustle, get a better job, and/or do some gig work. Don’t go back to school to get another 2+ year degree especially if that means reducing your income and/or taking on more debt. Keep your income and add more to it, until you pay off most of your high-interest debt.
4. Pay down debt aggressively. With your extra income, pay down your debt. Avoid buying more stuff or spending more money on unnecessary things. Extra income should go to gaining ground. Period.
5. Reduce expenses radically. Try to reduce your expenses as much as possible while still maintaining a decent quality of life. Here are 10 ways to reduce your monthly expenses.
6. Avoid investing until the debt is under control. While it might be tempting to invest at this level, paying down debt will likely produce a greater return on investment. For example, if you have high-interest credit cards with 22% APY it is much more financially advantageous to pay down that card instead of investing in the stock market where the annual rate of growth is closer to 8%.

Light at the end of the tunnel

Climbing out of a deep financial hole is not an insurmountable challenge. I have been deep in the hole myself. I’ve owed tens of thousands of dollars in credit card debt, have carried 6 figures in student loan balances, and have even endured foreclosure. Despite these major setbacks, gaining high levels of wealth is possible. I encourage anyone at this level to stay positive and stay focused, there is indeed light at the end of this tunnel.

Note: I’m not a financial advisor, I write for educational/entertainment purposes only. Nothing in this or any of my other articles constitutes financial or legal advice. This article was first published on Medium.com