Helping You Avoid Life's Financial Mistakes

5 More Tips To Help You Stay Locked In Your Debt Plan

October 29, 2008 By 2 Comments

Staying focus isn’t easy

In the last post I gave 5 reasons on helping you stay focused on your debt plan.  In this post I hope to advance on this subject a bit and give a few more reason to help you along the way.

Also if you know of a few more ways to keep focused that I haven’t thought of you can leave a comment at the bottom of this post and let me know about it.

5 more tips to help you stay locked in your debt plan

  • Have Goals. Having goals will help you stay focused by giving you something to focus on.  In most cases though most people will just say that getting debt free is my goal.  Don’t do this.  Instead have a goal for every time you pay off a debt like taking the family out someplace nice to eat.  Then once you have all of your debt paid off do something a little bigger like going on a vacation.  Getting debt free doesn’t have to be boring.  Make it fun and add goals.
  • Budget your money. Knowing how much money you have coming and going will let you know if you are spending more than you make and letting you know how much money you have left to put toward your debt plan.  Here is a great article on fixing leaks in your budget. Put a budget together and you will never have to worry about having enough money.
  • Build an emergency fund. An emergency fund will take the stress off your back especially if times are tough.  But when times do get tough you may decide not follow your plan for just one month thinking I’ll catch up next month.  Then one month becomes two and two becomes four and so on…  You get the picture.  Without an emergency fund it will be real easy to quit your plan.  Start a plan to save money back for emergencies even if it’s just a few buck a week.
  • Educate yourself. Educate yourself on ways to cut cost on your bills, budgeting better, and saving more.  There is constantly new information coming out on how to do your personal finances better.  Stumble Forward is a great place to start.  Sign up to are RSS to get more info on how to do these types of things.  Being educated on your finances will also help you from falling into traps with you money and making things worse.  Stay educated and you may come up with ways to improve your plan and apply more money to it to get debt free faster.
  • Revise your plan. Revising your plan will allow you to update it in case you have any changes that may happen and they will.  I’ve personally never had my original plan run the way it was suppose to.  There always seems to be something getting in the way.  This is a good time to rerun your plan and update it.   Also once you pay off a debt it’s good time to redo your plan again as well.

Would you add anything else?  If you have an idea that you would like to share please feel free to explain below in the comments.  If I get a few more great ideas on how to stay locked in a debt plan I may add them into a future article.

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5 Tips To Help You Stay Locked In Your Debt Plan

October 27, 2008 By 3 Comments

The biggest problem with your debt plan

Are you trying to get debt free?  For a lot of people this is true.  I’ve talked a lot about setting up a debt plan how to use it but this never seems to be the biggest problem with most people.  For most it’s following through with your plan that can be the tough part.

I’m sure a lot you would agree with me.

First, if you haven’t set up your own debt plan yet you can do so here and if you want to learn more about how it works you can check this post out as well.

In this post my goal is to give you a few tips that will keep you focused on your debt plan and stumbling forward to success.  I will also be posting 5 more tips later on this week so I can keep the post shorter.

5 tips that will keep you locked in YOUR debt plan

  • Have a debt plan. This may sound like common sense but you would be surprised how many people don’t have a plan to get out of debt.   If you don’t you may want to check this out.  Simply put a plan will keep things together for you when may get off track and lose your place.
  • Have you plan written down. Having your plan written down will help you remember the plan easier.  This is not a time to be lazy and make excuses.  Writing  your plan down shows you are serious about getting debt free.
  • Communicate with your spouse and family. Talking to your spouse and family about this plan ensures that it will stay strong.  If you don’t do this your spouse or family may neglect you and not take the plan seriously.  If your spouse isn’t in on the deal they may still be spending money and putting more leaks into your debt plan.  Start right by getting everyone on the same page.
  • Review your plan twice a day. Reviewing your plan regularly will help you keep the plan fresh in your mind.  This is a big one because once we forget about it we won’t do it anymore.  Doing this daily will build strong habits over time keeping you committed.
  • Keep your plan visible. Keeping your plan in a familiar place will help with forgetting about the plan all together.  A few places I like to keep my plan are on my refrigerator, on the bathroom mirror so when I get up in the morning it’s the first thing I see, and on my dresser.  I like this spot because it’s usually the last thing I will read at night.  Also it’s been proven that reviewing things before you got bed at night will allow your mind to work on these problems you are having as you sleep.  I’ve done this several times and had great results with it.

Do you have any tips that I should include into these post?  Leave me a comment about it and I may include it into future post.  Also don’t forget to check out the second post in this series later this week.

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Free Debt Managment Tools For You

October 15, 2008 By 2 Comments


A Great Tool For Anyone Who Wants To Get Out Of Debt

I recently came across this wonderful new tool to help those that would like to put there own debt plan together.  I’ve been playing around with it and found some very useful functionality.  This tool comes thanks to Vertex42.

First off you will want to download the tool which when downloaded can easily be opened in excel.  To download the file you can click here and you can download the spread sheet.

The tool itself

Once inside the spreadsheet you will see a few things.  Bear with me though I am going to give you a bit a detailed version of this tool but if you have already dealt with this before you can skip this part.

  • First, you will see a balance date.  Enter in the most recent date of the balances you have.  This way they can calculate how long it will take you to get out of debt.
  • Second, enter in the creditor information, balance, interest rate, minimum payment you are making, and then you can customize it to pay it off the way you prefer.  1 being first to be paid.
  • At the bottom of that chart you will see the total balance and the total payments you art making.
  • Below that you will see the total monthly payment.  This is the payment that will have the extra payment along with the minimum payments.
  • Then there is the Initial snowball payment.  This is the amount you would like to throw towards the minimum payment.  I recommend that you do at least $50.
  • Next, choose your strategy.  There are six to choose from.


  1. Snowball ( Lowest Balance First) This is my personal preferred way to setup the plan because by paying the lowest balance first you will see the quickest results.
  2. Highest Interest Rate. Depending on if you have a lot of credit cards with high interest rates or loans with higher rates this may be a better option.
  3. No Snowball. In this option it will show you what would happen if you didn’t apply any extra payment towards your debt.  I like to use this option as way to compare myself against the actual snowball plan.  This way I can see how much sooner I will be debt free.  However I will suggest this do not use this as a way to do you debt plan.  Use this option only to review your differences between options.
  4. Order Entered In Table. This is just how you entered them into the spreadsheet.  You may have one debt you would prefer to pay off before another.
  5. Custom High and Low. This allows you to pay off the debt with either the highest balance or the lowest balance.
  • Lastly you will see a chart that will tell you what the result will be if you would pay off this debt with the strategy and methods you have chosen.  It will even show you the month and year you will have this debt paid off.



Payment Schedule

This is my favorite part.  If you click on the tab in the lower left hand corner that says “payment schedule”  you will see a list of all the creditors that you have there payment and even the total interest you will pay to them once you have paid off those debts.

You can also customize the way you would prefer to pay off your debt on this page as well.

On the bottom half of this page you will see your entire payment schedule if you would decide to pay off your debt with the strategy you prefer.

If you have used this tool let me know what think about it?  Has it helped you?  Any ways to improve it?  Leave a comment and let me know.

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The Pros And Cons Of Getting Debt Free Yourself – Part 2

September 17, 2008 By Leave a Comment


In part 1 we talked about how to actually get debt free yourself.  In part 2 we will talk about the advantages and disadvantages of doing this strategy.

Advantages

  • The consumer is in full control.  Again, as I have talked about this in part 1 of these articles.  You have complete control of how you would like to get debt free.  If you would like to take a more conservative approach and pay off your debts slowly it works.  If you decide that you would like to take a more aggressive approach and cut expenses quickly feel free to do so.
  • No damage to your credit.  This is one of the greatest reasons right here.  Saving your credit can save you a huge amount of time and energy.  Without damaging your credit reports and you can get back on track much more quickly.  However I must make one point though.  This holds true as long as you don’t miss any payments.  Which is truly the kiss off death to your credit report.  Missing one payment on anything can kill your credit.
  • Saves your reputation.  If you don’t want this to end up in the eye of the public this can be an excellent way to conceal that.  As with bankruptcy your reputation tends to go down the tubes for a long time, 10 years to be exact.

Disadvantages

  • You Must be disciplined.  If you expect to get debt free you must stay disciplined and focused.  Getting out of debt is not easy.  With all the negative collection calls, bills, notices, and forclosures it’s easy to get depressed of the situation.  You will have to be tough as nails.
  • Establishing an emergency fund.  This can be a tough issue considering that you don’t want to create anymore credit or use any of your credit cards.  Although once you have paid off your debt this is the first thing I recommend to do.  An emergency fund will create a sense of balance that will let you breath and also not put you back into a rut once an unexpected bill comes along.  I also want to add that using your credit cards as your emergency fund is also a bad idea. 
  • Failure to make extra payments and increase in debt.  This could be the biggest disadvantage to  the program.  If you stop paying the extra payments and debt increases you could be in for some serious issues.  In fact if it builds up to much it could turn into a situation I seen an individual go through once where she had so much debt that she couldn’t even make her minimum payments and get by. 

When should you start?

As soon as possible.  Don’t delay.  You may even be thinking that you don’t have much debt and believe you don’t need to be in this program. 

It’s never to late. 

Give yourself the benefit of the doubt.  Start now.  I’ve known people who have had great financial situations and just because of a little pride and overspending have put themselves into terrible situations. 

Call to Action.

  • Start gathering your bills now. 
  • Write out how you will pay them off. 
  • Put a plan together and put it in a familiar place.
  • Read it twice a day.  Morning and evening.
  • Stay focused and pay off your debt!

If you haven’t read part 1 you can do so here.

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The Pros And Cons Of Getting Debt Free Yourself – Part 1

September 15, 2008 By 8 Comments


Can you do it yourself?

Out of all the different ways we have been talking about over the last few days, getting debt free yourself will probably be the first option most people try.  Simply for a few reasons.

  • It cost you nothing to do it yourself.  Other than just paying the debt off.
  • You don’t have to qualify for the program.  It’s your program.
  • Finally, you can do it how you want to.  You have complete freedom of how you want to get debt free.

How do I get debt free?

This is the biggest question people consider when they want to get debt free.  Some will just pay minimum balances on all there accounts or apply a little extra to every account thinking it will save me more than if I just made the minimum payment.  Along with that doing some tough budgeting to apply more money to your debts.  But does this work?

However this may seem like a great way to go about getting debt free but there is a difference in getting debt free just by doing some strict budgeting or actually putting a plan together.  This plan is in known as the debt snowball plan.  You may have heard of people like Suzie Orman or Dave Ramsey talk about this.

How does the debt snowball plan work?

The plan is actually very simple.  Although once you impliment it you must stick to it.

1.  Agree that you won’t stack up more credit.  If you keep adding to your credit cards or any other debt then getting debt free will not actually work.  You must stop using your credit.  You must also stop creating new credit as well.  No new credit cards.

2.  Gather all of your current debts.  Get all of your credit card bills, HELOC (Home Equity Line Of Creidit),  car loans, personal loans, school loans, and mortgage bills together.  Include all debts not just the ones with higher balances. 

3.  Line your debts from lowest to highest balance.  This order is how you will pay off your debts.  Some will say pay off the highest interst cards firsts.  I disagree.  Order them from lowest to highest ballance this way you will see progress right away in the plan.  Also put your mortgage last to pay off.  The reason being there are some great tax benifets to your mortgage as apposed to your credit cards.  Also credit cards will usually have higher interest rates.

4.  Pay the minimum payments.  Pay all the minimum payments on all of the debts except for the one with lowest balance.  The debt with lowest balance you will pay the minimum payment along with an extra $50 to $200.  Whatever you pay extra keep it the same.  Don’t add or subtract any of the extra that you pay.  So if you apply $100 extra always keep it at $100.

5. Continue to pay this until you have the first debt payed off.  For example if your first credit card balance is $1000 and the minimum payment is $50 then pay the minimum plus an extra $100 or whatever you choose to pay extra.

6.  Celebrate!  This is a very important step that most skip.  Celebrate that you have paid off a debt especially your first one.  You don’t have to do anything big.  Maybe you go out to eat at a nice resturant, take the kids to the zoo, or go see a movie.  Have some fun with this.  Getting debt free doesn’t have to be a drag.  It can be fun too.

7.  Start paying off the next debt.  Start paying off the next debt with the next lowest balance except this time add the $100 that you are paying extra plus the $50 you paid on the previous debt along with the minimum balance you are paying on the current debt.   Do this until the debt is paid off.

8. Celebrate again!  Obviously you know why this is important from reading step 6. 

9.  Pay off the next debt.  Again start paying off the debt with the lowest balance and add the $100 extra payment along with the minimum balances you paid on the previous two debts. 

10.  Celebrate again!  Again you know the drill. From here just keep on repeating steps 9 and 10.  Once one is paid off continue on to the next debt with lowest balance applying all the minimum payments plus the extra $100.

You can see how this will eventually begin to escalate to the point where the only debt that is left is your mortgage.  Then with all of those minimum payments you were applying to your credit cards along with that extra $100 you will have that mortgage paid off in now time at all.

I’m debt free, now what?

Once you are debt free start saving the money for an emergency fund.  Save six months worth of expenses in some sort of savings account for emergencies only.  This way if sudden expenses do come up they won’t dig you deeper into debt.

After you have an emergency fund established save the rest back for retirement and possible college savings for your kids.

Last but not least take action.  This is the only way you will solve the problem.  If you wait you to long you may have no other choice but to consider debt negotiation, consumer credit counseling, or worse bankruptcy.  Do let that happen to you.

Start Now!

Finally, are you using this method to get debt free?  Are you interested in doing this program?  What are your concerns?

Read part 2 of getting debt yourself to learn the pros and cons of this program.

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