Pensées

Thoughts on the Meaning of Life…..by Todd Helmkamp

Debt-Payoff Progress

Posted by Vogeler on January 23, 2009

As you may know, my wife and I are committed to being debt-free.  There are several reasons for this:

1.   We want to be financially independant.  You can’t do that if you’re shackled with debt.

2.  We want to be free to give whenever and wherever Holy Spirit leads us.  You can’t do that if you’re shackled with debt.

3.  We want our kids to understand sound financial management.  We have to set the example.

4.   Proverbs 22:  26-27

Do not be a man who strikes hands in pledge
or puts up security for debts;

if you lack the means to pay,
your very bed will be snatched from under you.

‘Nuff Said.

According to our debt-payoff plan, we should be completely debt-free by 2019, including our mortgage!  So I will be 40 years old and owe nothing.  Of course, who knows besides God what the future holds?  But at least we have a plan, and we’re pretty excited about it.

We have finally gotten my medical bills from my heart-jump scare in July paid off, so now that money can go towards our one credit card (which only has a balance because our rate for that is lower than my wife’s student loan rate, so we transferred that balance to the card).

We use a process called snowballing (so-called because of how a rolled snowball is formed), which basically means that as we get one debt paid off, we apply the amount of that monthly payment to our next debt.

For example, say I have four debts.  I pay the minimum amount on each debt per month.

Minimum Payments:

A.  $50

B.  $100

C.  $150

D.  $250

After I have debt “A” paid off, I will apply that $50 per month that I was paying toward it to the next debt, debt “B”.  So my new payment list looks like this:

A:  $0

B:  $150

C:  $150

D:  $250

This method results in much greater payoff power!

I encourage you to first, take a look at your monthly expenses and cut back where you can.  Create a budget, and commit to stick to it!  Then, contact your lenders and let them know that any amount you pay over and above the minimum payment is to be applied to the principal.  After that, watch your debts disappear!

If you have any questions, or need help setting up a budget, let me know and I’ll be happy to help!

Some great resources:

Dave Ramsey:  a fantastic Christian financial guru

Joe Sangl:  my first introduction to personal finance.  Fantastic stuff.

Get Rich Slowly:  a great site about managing your personal finances.  Includes articles, tips, etc.

The Simple Dollar:  another great personal finance site.

Wise Bread:  still another great site.  Includes posts by multiple authors, offering varied perspectives on personal finance and money management.

Dinkytown:  a neat site with a weird name.  TONS of finacial calculators to help you understand how debt works.

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