The 2% Rule to Get Debt Free Fast: An Innovative Method To Pay Your Loans Off For Good

The 2% Rule to Get Debt Free Fast: An Innovative Method To Pay Your Loans Off For Good

by Alex Michael, Cassie Michael


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In The 2% Rule To Get Debt Free Fast, Alex and Cassie break down the steps that took them from over $100,000 in consumer debt to living a debt-free life in just a few short years.

Alex and Cassie's step-by-step plan is for even the most financially illiterate, and has helped thousands of their followers on their website,, get their finances in order.

In this easily digestible guide, they show you how small changes can have a big impact so you can skip the quick fixes and change your life forever. They'll teach you:

• How to pay off your mortgage quickly without draining your budget

• How to create an emergency fund fast while juggling your monthly bills

• What unsecured and secured loans really mean and how much they are costing you

• When you should be paying in cash and when you should use a credit card

• Creative ways to save on everyday expenses

• How to still eat out without breaking the bank

Complete with personal anecdotes, helpful worksheets and money-saving tips and tricks, The 2% Rule To Get Debt Free Fast has everything you need to live a life unencumbered by debt.

Product Details

ISBN-13: 9781624144431
Publisher: Page Street Publishing
Publication date: 10/24/2017
Pages: 192
Sales rank: 786,932
Product dimensions: 7.30(w) x 8.90(h) x 0.60(d)

About the Author

Alex and Cassie Michael are the founders of the popular blog, where they have helped hundreds of thousands of fans with their finances. They live with their six children in Utah.

Read an Excerpt


Why You Need This Book

By: Alex

In the morning, you wake up late for work because you were up so late the night before. You click the snooze button a few extra times to get the sleep you so desperately need, yet you still wake up groggy, relying on coffee, chocolate and then soda throughout the day to get that extra energy you're depending on.

Already late, you notice you didn't have time the night before to set the coffee maker to go off. Instead, you wind up stopping by the coffee shop on the way to work (more money spent out of pocket) and pick up a bagel while you're at it (more empty carbs) because you just didn't have time to make yourself a healthier breakfast. The barista knows your name, as this isn't the first time you slept through your alarm or that you missed making your coffee. Sure, the experts share that breakfast is the most important meal of the day; one day you hope to actually accomplish that.

As your morning grinds on, your boss reminds you that the report she asked for a few weeks ago is due by end of the day. You mutter a few words under your breath and stammer that it will get done like it always does. The only problem is the way it always does is in a rush and without the kind of quality you would expect from someone if they were working for you.

Nearing lunch, your co-workers start planning which restaurant they hope to visit today. You quietly calculate the total cost of your lunches out this month and realize you could have made a significant dent in your credit card balance this month had you brought your own lunch. Oh well, what's another day? Maybe you can start making a lunch to bring to work ... next week.

After being gone for a lunch that consisted of too much rich food and a bit longer than you expected, you realize that report really needs to get done. You start working on it and end up leaving the office an hour later than you were hoping and turning in a less than perfect report.

Upon leaving the office, you realize your family is going to be famished by the time you get home. There's no way you can expect them to wait for you to plan and cook a healthy meal by the time you walk in the door. You realize it's Tuesday, meaning you can stop at a local drive-in and buy the whole family tacos, thankful that some genius came up with that amazing Taco Tuesday.

On the last minutes of the drive, you realize you just ate out for all three meals of the day. Let's face it, it's expensive and not the healthiest way to live, but what other way is there?

You get home to find the house a bit disorganized, the kitchen needing a bit of tidying, and then your spouse reminds you that guests are coming over in less than 30 minutes. You all quickly scarf down your meal of tacos and frantically work to clean and prepare for your guests to come over.

After a full night of company and helping your kids with their homework, you drag yourself to your bedroom to find your bed in the same mess you left it in that morning. You think about those experts again and remember that one of them might have stated how much better it was to air your bedding out anyway, so you claim success although your mind might be in a bit of disarray from the disorganization and mess of the room.

Finally, you crawl into bed and either stream your favorite sitcoms that you missed from the day before or watch the late show, hoping a few jokes might calm you down.

As you finally drift off to sleep, you realize that you're about an hour past your ideal bedtime. Those experts keep recommending you set a bedtime and stick with it; maybe one day you'll actually do it. Just before the sweet release into sleep, you're jarred awake when you realize you forgot to set the coffee maker, and you forgot to get the meat out of the freezer for the next day's dinner.

Maybe tomorrow will be different.

Does this day sound familiar to you at all? It sure does to us because in our years of debt accumulation and attempting to pay off our debt we were letting life fly.

No one really plans to get into debt, financial woes or financial struggles. For so many, you live life and before you know it, you are in a lot of debt, and you aren't completely sure how you got there, what you have to show for it or how this happened.

You've picked up this book for whatever reason. Maybe you are in a little bit of debt and need some tips and encouragement to become debt free. But maybe you are deep in debt and feeling completely lost, hopeless and at the end of your financial rope.

We were that couple at the end of our financial rope. We were that couple that had sunk so low on the debt-boat. We were hopeless. We could see no way out. We were stuck. We had over $108,000 of consumer debt.

As you read this book, you will read excerpts from our financial story: one that is part soap opera and part primetime drama and yes, very often, you may shake your head in disbelief at our stupidity.

So, Why Should You Listen To Us?

Because we've been there! And we were able to climb our way out. We paid off over $108,000 of debt in a short amount of time.

Our plan not only shares how to get out of debt step-by-step, but also how to stay out.

We promote a lifestyle of financial wisdom and debt freedom via slow, gradual change while encouraging a sustainable lifestyle the whole journey. We show you how to take the intentional steps you need to take back control of your lives.

Other plans require that you change your lifestyle overnight, dropping everything and slashing your budgets by 80 percent and eating rice and beans until the end. We had dozens of false starts. We'd attempt to follow those plans and wake up that super-frugal, debt-slashing couple each day. But the second we flubbed up, we felt like failures, hopeless again. It seemed that nearly weekly we'd tell each other we'd failed again because we went over budget, or we'd gone out to eat when our new budget didn't allow, or we'd bought new shoes when we shouldn't have. We'd say, "We will start again on Monday," only to repeat the same sentence a few days later. It was very frustrating. We kept setting ourselves up for failure. We couldn't meet the demands of the debt payoff plans. It was a crash diet that was not sustainable.

How could we get out of debt if we could hardly even get out of the gate? Then, if we successfully made all the sacrifices, how would we stay out of debt and not keep jumping back into it? It just didn't work for us.

How Did We Get Here?

Many of our debts were obviously foolish. We look back today and realize that much of our debt was obtained by eating out or traveling — because we wanted to do it all when we were young. Funny thing, those restaurants and most of the trips are all a blur now. The pain, the turmoil and hardships we experienced from going into that much debt stick with us even today.

But as you will see, it wasn't just mindless spending that added up to that total amount of debt. It was debt accrued from car loans, one-of-a-kind deals and keeping-up-appearances purchases.

For example, who hasn't had someone knock on your door and share with you how much cleaner your home would be if you purchased their vacuum, one that will be the last vacuum you'll ever need to buy? Well, not only did they sell us the vacuum, which we could not pay cash for, but it came with a hefty 22.97% APR (annual percentage rate) which made the amount we paid significantly more than the original price by a lot. We also bought a water softener the same way at a lower 17.99% APR. The rate was lower than that of the vacuum, but still so high we shudder at the amount we really paid.

We've since learned that although products might be of the highest quality, is it really worth the debt you might incur to purchase them? The words, "This will be the last product of this type you'll ever need" are never true ...

There were also other charges that seemed to be more justifiable, like buying furniture to fill a newly bought house or buying jewelry as special gifts for my wife to make her feel more special and know how I really felt for Valentine's Day.

First, it was the furniture. After buying our first home, we had so much empty space after moving from our small apartment. So we did what we thought everyone did: go shopping at the furniture store and maximize the amazing deals they were offering.

We found the couch, the loveseat, coffee and sofa tables and the kitchen dining set that we just had to have. The salesman was a huge help taking care of us throughout the whole process, even asking us how we were planning to pay for the items. This was still early in our process of accumulating debt, so a little lump crept up in my throat until he confirmed that we could just easily apply for their store credit account and should be out of there in no time.

It was so easy! Just fill out a form and then wait 15 to 20 minutes for them to come back with their answer. But, here's the rub: that furniture we purchased had a nice 21.00% APR that came along with it. We had so many preconceived notions going into home buying that we wish we hadn't developed, like needing to furnish an empty house so we could entertain guests. Much of that furniture has long ago been replaced due to age, but the memories of friends that visited with us, who couldn't have cared less whether we had an expensive, debt-ridden table or a card table we bought at a discount store, remain. If only we had known what was important and what would last.

Then something else started to happen — we started finding it harder and harder to keep up with payments and keep the bill collectors at bay.

Then help came, right into our mailbox!

Have you ever received those bulk mailings offering the recipient a loan for up to a few thousand dollars, and all you had to do was cash the check? Maybe it was a guaranteed loan offer and all you needed to do was to come into their office to set it up? If you wonder who actually would acquire one of those loans with astounding interest rates, well now you know.

We knew we were having problems making our payments on our loans and needed money fast. Of course, I probably didn't need to tell you that we were somehow able to still justify our lifestyle of eating extravagantly and making our small weekend trips.

Yes, we were so desperate that we got one of those loans. As I write this, I'm still aghast at the 36.00% APR just to borrow $1,000. The top of the letter reads, "Simple. Convenient. Timely. Useful." Odd that it doesn't include the words costly and selling your soul, but these loans seemed like such a gift at the time when we got them. They didn't require a credit check and that particular one had the instructions, "Just endorse the attached loan check and deposit it in your bank account" in bold at the top of the letter. I mean, not only did I not have to have my credit checked, but I also didn't have to face the embarrassment of meeting a loan agent face to face with the probability of walking out red faced and empty-handed.

You see, these companies prey on those that are grabbing at straws financially. They are waiting right there with the promise you can use the money any way you want. Seriously, this loan offer letter promises it can be used for anything including a special purchase, paying off credit card bills, fixing up the car or house or even enjoying a weekend getaway.

This is where it gets scary. Getting these loans was easy. Paying them back was nearly impossible.

Loan after loan, we continued down the rabbit hole. It had to come to an end, and finally it did. At least, until we were really needing money with nowhere else to turn.

Those were the days I had to swallow my pride even more, face my shame head on and walk into my first Pay Day loan office. If I thought 36.00% APR was bad, just wait. It got worse, MUCH worse.

That's why after all the tears and stress we came up with a new, permanent, achievable method to ditch the debt for good! And friends, this is where our 2% Rule was born! If we were a couple that could so foolishly dive so deep into debt, and the 2% Rule worked to help us get out of debt, then anyone can achieve debt freedom.

No matter where you have been, we encourage you to keep reading and get excited that it really is possible to pay off your debt and meet your financial goals. Let's dive right into the heart of the plan to show you just how easy it is to get started. Before you know it, you just might be celebrating your new debt-free status. Know that we'll be celebrating right along with you.

Read on to learn the steps necessary to become debt free using our 2% Rule.


What Is The 2% Rule?

By: Alex

We call this our 2% Rule because we only make changes in 2 percent intervals. Unlike the crash-diet-80-percent-budget-slashing that other debt programs require, we only ask that you apply 2 percent changes. Our gradual approach consists of a small decrease each month in expenses and a small increase in income.

First we will share the heart of our 2% Rule and then break down some of the principles. Don't worry if you have questions. Remember, this whole book is meant to teach you this approach, so those questions you have now will be answered by the time you read the last page.

At the heart of the 2% Rule is the idea of gradual change. We knew that it took us years to rack up the amount of debt we were in when we started our journey. We knew that it took years for us to establish our patterns for living that were internalized deep within us. We learned during our early years of debt reduction that changing those patterns wasn't something we could do overnight. It would take time to change those habits, and it would take time to dig ourselves out of the mess that it took years for us to get into.

The 2% Rule

The 2% Rule: Track your monthly expenses and earnings. Use this actual information for the following month to decrease spending by 2 percent and increase income by 2 percent.

It almost sounds too basic, doesn't it? The reality of this plan is that it uses some basic common sense. It doesn't need to be complicated, and it factors in where you are now and helps you apply small, gradual change to get you where you want to be.

Implementing The 2% Rule

Here are the six steps you will follow to implement the 2% Rule:

1. Track your expenses and earnings for a month

2. Create your baseline budget based on the results from Step 1

3. Decrease spending the following month by 2 percent

4. Increase income the following month by 2 percent

5. Apply the "found money" from steps 3 and 4 towards your financial goals

6. Each month repeat steps 3 through 5 Let's break each step down and discuss both the hows and the whys.

Step 1. Track your expenses and earnings

Where this plan differs from most is that we want you to see where you are today. The goal is not to ask you to consider and plan on paper the minimum crash diet budget you think your family can follow. The goal is not to have you sit as a family and pore through hours of paperwork trying to figure out all the expenses you plan to cut from the very start to trim your budget down to almost nothing.

No, your first step is simply to track this month's expenses. Don't worry, this is not a long, arduous research project but instead can be done in one of two simple ways.

The first method is to simply track your normal spending over the course of a month. We encourage you to group your expenses into categories, as it will make it easier to find places to cut in future months by determining where most of your money is going.

You can use the following quick list of sample categories to start. Obviously, this is just a list of high-level categories that will fit many families; your family may wish to add other categories specific to you and leave off others that are not relevant:

Living Expenses

• Groceries

• Gasoline

• Clothing

• Entertainment

• Eating Out

• Home Improvement

• Christmas and Other Holidays

• Travel

• Miscellaneous Shopping (e.g., crafts, school supplies)


• Auto

• Insurance

• Utilities

• Cell Phones

• Internet

• Cable

• Services/Fees

The second method is relevant to those of you that have been tracking your spending habits either by using an online tool or other tracking method. Many of you might be using a credit card for most of your expenses. If you are, I encourage you to check your credit card account and see if they offer you a breakdown of the types of expenses you are making each and every month.

Here is an example from American Express. You can see above just how easily they break down the charges based on stores and categorize your spending for you. This isn't an encouragement to use an American Express credit card, but rather just to give you a guide of what you might expect to see on your own credit card website.

What's great is if you use some type of non-cash payment method (credit card, debit card or even check) for a majority of purchases, you now have all those expenses painlessly tracked in a single location and already categorized. You can review and change categories for certain purchases, and even better, split some transactions into multiple categories without breaking a sweat.


Excerpted from "The 2% Rule To Get Debt Free Fast"
by .
Copyright © 2017 Cassie and Alex Michael.
Excerpted by permission of Page Street Publishing Co..
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

Table of Contents

Title Page,
Copyright Notice,
Prologue The Honeymoon That Started It All,
Chapter 1 Why You Need This Book,
Chapter 2 What Is The 2% Rule?,
Chapter 3 The Real Cost of Debt: Unsecured Loans,
Chapter 4 The Real Cost of Debt: Secured Loans,
Chapter 5 Our Mother's Day And Finding Your Own Why,
Chapter 6 Two Steps Forward, One Step Back,
Chapter 7 Putting The Plan In Motion,
Chapter 8 The Exponential Payoff Strategy,
Chapter 9 The Secret That Changes Reality,
Chapter 10 The Golden Ticket,
Chapter 11 Trim It Off Slowly Part 1: Bills,
Chapter 12 Trim It Off Slowly Part 2: Living Expenses,
Chapter 13 Trim It Off Slowly Part 3: Grocery/Household Expenses,
Chapter 14 How The Money Train Sped Up The Process,
Chapter 15 The View From 30,000 Feet,
Chapter 16 Two Percent To Life,
Chapter 17 Investments for The Rest of Us,
Chapter 18 The 7–10 Mortgage Plan,
Chapter 19 It's What We Weren't Talking About,
Chapter 20 Two More Critical Factors,
Chapter 21 Your Journey Begins,
Epilogue Back To Where It All Began,
Appendix A,
Appendix B,
Appendix C,
About the Authors,

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