Wednesday, June 26, 2013

Pay Off Debt

I Promised my next post on debt.  Now besides doing all the things I talked about in my last post there are a few other tips I could share.  I kept hearing the leaders of the church talk about how we need to get out of debt and break the chains that bind us.  The feeling I get when I am in debt is a feeling of bondage.  It means that I am living in the past.  I am living with past decisions instead of living with future decisions.  As my husband and I worked hard to get out of debt we found that we have more freedom and choices rather then less.  Now that our "bad debt" is gone we can make the future what we want instead of paying off the past.

1.) Make a Goal
      Check out this link for a Debt Elimination Calender.  I have got a lot of great information on finances on Provident Living.  What you do is you line up all your debt payments such as credit cards and student loans and car loans then you put the one with either the highest interest rate first or maybe one that you can pay off first or one that has the least monthly payments.  Whichever is going to be best in your situation.  You pay that one off first and then when that is payed then you add that payment to the next debt payment.  Since you weren't using that money for regular expenses you can use it to more quickly pay off your debt.  Once the next debt is paid you apply that whole payment to the next and then to the next and so on and so forth until it is paid off.  Figure out what you are going to pay on what and make sure to follow step number one on the last post, quit making more debt.  Go to my post on goal making for more tips.

2.)  Calculate it:
Financial Calculators.  Sometimes it's just hard to know where to start and the debt and money situation can seem overwhelming. This link had some already made up calculators which are easy to follow.  Just plug in numbers and get information like:

How soon could I pay off all my debts?

How much should I save for emergencies?

Where is my money going?

Would spending a little less and saving a little more make a difference?

How long will it take to pay off my credit card?

When will my loan be paid off?

What if I pay a little extra each month on my loan?

What would my payment be if I borrowed?

Should I refinance my home mortgage?

What would be my monthly payment on a new home?

How much should I save for retirement?

Are my current retirement savings adequate?

How much retirement income will I have if I save regularly?

How much should I save to reach my goal?

How much could I have if I saved regularly? 

Pay Close attention to the first Calculator for debt payoff.  This information can give you a realistic goal.  I remember being really gung ho about wanting to pay off my credit card debt and every paycheck I would just pay it all off well then I had no more money to buy our needs with so I had to use the card again and then I had a viscous cycle.  If you are going to use a card keep track like a debit card and have the money first and then pay it off.  Don't be in a rush, be patient and smart.  We tend to make these decisions emotional when we are in a lot of stress over it but when we remember that the Lord has promised to take care of us if we are doing all we can then you have to let the rest go and just do the best you can and put the past behind you and work with what you have now.

3.)  Move on and make future plans.  Now on to good debt like buying
a home and make sure to keep yourself in check with your budget.  My sister-in-law is trying to move me into the 21st century so I have been looking into some expense and budget trackers for my smartphone.  This may be the way to go instead of my little notebook.  Anyone know any good ones with minimal cost and without having to purchase extra software?  Or is it worth it to get the extra software?

4.) Do Not Forget to Save.  If you have a savings and make that top on the list in your budget then you will less likely have to go into debt again because there are always things that come up that you have to spend money on, like our health and if the car breaks down in a ghost town...etc...And next time you will be prepared instead of going down the whole again.  But if you do have to go in the whole again at least you know how to get out again.

One Small Step at a time!

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