Most financial advisors in Israel will tell you you’re perfectly fine if you’re “getting by,” meaning: you’re making your payments. Not deepening the overdraft. Not making things worse. In my view—that’s not enough. Debt is not a static state. Debt with interest (meaning, almost all debt) is a current you have to swim against. And the interest always wins.

So if you want to stop fighting every month, stop burning money and living on the edge, you have to get out of debt. All the debt (yes, even the car loan, and the bank loan, and of course the overdraft).

The beginning is hard. So why bother?
Until now you’ve been doing something that was easy and available, but didn’t lead to the desired result. Try now to do something hard that others don’t do, because you don’t want to be “like everyone else”—for example, like half a million Israelis with files in debt collection, or a third of Israelis who are in permanent overdraft.

The beginning will require discomfort, effort, and developing new abilities. And we’re not talking about abilities in math. Rather, internal qualities like delayed gratification, focus on the goal, the ability to say “no” without giving others an explanation—these are the qualities that will get you to your destination.

The first goal—financial stability.

When are you considered financially stable?

1. You have no debt. At all. (Except for a mortgage, which is unfortunately part of the financial DNA of life in Israel).
2. You have an emergency fund—savings with enough money to sustain you for three to six months. Savings that are liquid, accessible, and that you won’t use under any circumstances except an emergency.

Already after you’ve achieved the first goal you’ll feel tremendous relief from the financial survival journey you’re currently living.

Achieving the first goal—the steps on the path to rapid debt closure

Stage A—Mapping the debt
The first step in the process of financial improvement and debt closure is—understanding your current situation.
I won’t lie, this is one of the emotionally hardest stages to execute in the entire financial change process. Looking reality in the eyes can be scary and paralyzing—but don’t let fear lead. If you need help understanding where you stand today—ask for help! But don’t skip it.

Here you can find my complete mapping table—
If you want to do the mapping yourself, here are three things that are important to understand for each debt. Make sure you’ve written down every credit card, every item purchased in installments, and every loan you’ve taken, separately:

1. How much money you still owe (“loan balance”).
2. What is the amount of the monthly payment you’re paying to close this debt (in the case of an overdraft for example, the automatic answer is actually 0. In the case of a fixed monthly charge on credit—the answer will be the amount of the fixed charge. For a loan, the answer will be the amount of the monthly repayment)
3. What is the interest rate on the loan?

When you finish collecting the data, I recommend summing up—how much do you owe in total as of today? And how much are you paying each month toward debt closure?
These numbers will help you in the following stages, and especially understanding how much in total you’re paying per month toward debt closure.

Here are two examples of how to sum up your debts and payments:
You have a bank overdraft of 13,584 NIS
An installment transaction for a purchase at Lululemon totaling 765 NIS, divided into three payments. As of writing the table, payment 1 out of 3 has been deducted, and 2 payments remain (in the current charge and the next charge).

What’s the principle here?

As long as you have open debts (permanent overdraft, bank loans, debts and interest-bearing payments) and you don’t have an emergency fund—you’re burning money and time from your life in an endless cycle of financial struggle.

To get out of all this and be free—you have to understand your financial situation.
Without mapping your debts and payments, you’ll never be able to truly close your debts once and for all.

What other actions should you take to close debts efficiently and effectively? Keep reading

Stage B—This is how you close debt fast:

1. Stop “surviving” and start taking steps forward
   Bring in more than you spend. Every month, without exception. This means doing all of the following things:
   Manage a tight and precise budget, which has room mainly for one thing—closing the debt!
   Work additional jobs, or open a side business (the kind that doesn’t require financial investment)
   Sell unnecessary equipment
   Make sure you’re not burning “fuel” (money) on things like unnecessary fees and unused subscriptions
   Make do with what you have (furniture, clothing, car) until you have extra money to buy new. If you need new equipment—use secondhand and donations
   If you’re really brave or if the situation is particularly severe—move to cheaper housing

I’m not writing anything here that I haven’t done myself.
There is no other way.

2. Positive cash flow is your weapon.
You brought in more than you spent, and now you finally have money at the end of the month that you can work with—use it to close the overdraft!
Closed the overdraft? Start accumulating savings, which will be used for early repayment of loans and payments. When there’s an amount in savings that equals a loan, release it on its way and simply close it. Next month you’ll have one less loan payment, and each month will bring you even faster to closing the next loan or even reaching the coveted zero line.

Achieving the second goal—becoming financially unbreakable

Stage C—This is how you make sure the debt doesn’t come back:

3. Reached the zero line? Don’t wait for an emergency—prepare for it in advance.
You haven’t finished creating financial stability before you have an emergency fund. As guru Dave Ramsey says: “If you don’t have money for an emergency, you’re in an emergency that hasn’t materialized yet.” You need to keep saving at the same pace until your emergency fund is full.

Got out of overdraft and filled the emergency fund? Congratulations! Now you’re at your new zero line. Here the nightmare ended, and the fun part of your financial journey begins!

Step by step

Map all your debts in one table. Include all debts and current payments, including loans and the bank overdraft.
Put debt closure as top priority—make sure that every month you’re bringing in more than you’re spending!
Take into account that to meet this goal you need to radically change (even if temporarily) your conduct—sell things you don’t use, buy only what you must and check that you’re not burning money on unnecessary fees and subscriptions.
After you’ve reached positive cash flow, don’t waste time and immediately close the overdraft! Without closing the overdraft you’ll immediately return to the point where you started.
Reached positive cash flow and closed the overdraft—don’t stop there! Open an emergency fund and fill it with the amount you need. Without the emergency fund, you’re financially vulnerable almost as if you hadn’t made any change at all.

“This is so hard! Isn’t it better to just stay in overdraft?”
You’re adults and you’re responsible for what your life will look like. Dieting is also hard and there are those who do it anyway. Running a marathon is also hard—and there are those who run marathons. Don’t let the difficulty deter you. The life you want is on the other side of this effort.

On the path to debt closure you’ll need to say a lot of “no”—no to vacations. Not even to “a breather at a really cheap hotel.” And not to eating out. Not to expensive gifts for the kids. It even means no to saving for additional future goals if you haven’t finished with past loans yet.

Sounds extreme? Maybe.
In my opinion—staying in overdraft or in debt is much more extreme than continuing to spend money you don’t have.
Staying in overdraft means agreeing to live with a feeling of suffocation, in uncertainty, in a constant feeling of guilt about every shekel that goes out. And mainly—because if you don’t decide to say “no” to yourself today, you’ll find yourself facing a “no” on something big you really want in the future.
And you really don’t deserve that.