In the lessons I am writing now for my students who are in or close to week 215 in the Wealth Creation Mentoring Course  I go into detail about how you would go about dealing with debt problems.

Creditors – lenders – would define a debt problem as debt that you are battling to repay monthly. If you can repay monthly without missing payments, then as far as they are concerned, there is no problem.

Q: Does the difference in how we define a debt problem matter? I say nearly all debt is a problem, lenders say only debt you default on?

A: Very much so. When it comes to wealth creation, how you define a debt problem is crucial. You may see it like the banks do – as a problem only when you cannot keep up with all your instalments. Chances are good that you will share their view until you examine your conditioning, because they indirectly control what you believe through their influence over the media and conventional education.

So you may be spending a third of your monthly income on debt repayments (sounds reasonable ...) but only saving a fraction of that, perhaps by means of policies with financial institutions. That would make you the average citizen, a model citizen even. Because you are doing it by the book - their book!

But in terms of wealth creation you would not get anywhere.

Why? Because chances are the interest rates plus the fees you must pay on your debts easily outstrip the interest rates your policies and savings bring in – less their fees. And chances are these policies do not perform well against inflation – only just outpacing it, if that. Which means that your position is not good, in terms of becoming financially free.

Quite simply you need far higher growth, and you also need far less financial risk (debt).

It’s only when your load becomes too much to handle month by month that the debt industry will be concerned – because the risk of default becomes high. Until then, however, while they may rate you as carrying a ‘healthy’ amount of risk, the hidden truth is that it is destroying your dreams.

I define a debt problem as any debt at all that is not productive (i.e. debt such as a bond on a rental property with a very good IRR – in this case the income more than outstrips the debt, and because you have done your worst case scenario projections, you remain in financial health even when interest rates rise and so does inflation).

So if you are the average person with a bond and a car installment plan and a credit card, if you want to be wealthy, you have a problem.

This problem need not trouble you until you retire. Or get retrenched. Then it is going to be a big problem. Until then do not expect anyone out there except me to remind you that this problem needs attention. But I know that because you are reading this, you genuinely want financial freedom and wealth. Which means you want to clear the way for success.

How do you do this? By eliminating your debt. And the good news is – it can be done much faster than you think.