I have been inspired to attack our family finances head on. I am sick and tired of letting our finances control our lives instead of us have control over our finances. We have debt. No surprise most everyone does, but that is not the point. I was over at MoneySavingMom.com yesterday and she issued a challenge for 2008. To plan a budget and basically take more fiscal responsibility. I was feeling completely overwhelmed yesterday as she recommends coupons. They scare me. I am frightened by them. Truly. I am not making this up. I am afraid of them. They put so much pressure on me and then when they expire, oh that is when I am the most scared. But I decided to at least join the challenge. And then yesterday I remembered something that I had learned a long time ago.
When I was in college I found a book regarding getting out of debt. I don’t recall the name of the book, but that is ok, as I remember the plan to get out debt fast. It is called the Rapid Debt Reduction Plan. It goes something like this:
1. Put your debts in increasing order. I don’t care what the interest is. Put the lowest balance first and go to the highest.
2. Outline how much the minimum payment is for each bill.
3. Calculate how long it will take you to pay off the first bill, using the minimum payment.
4. Once the first bill is paid off add the amount you were paying to the first bill to the amount you have been paying to the second bill.
5. Once the second bill is paid off add the amount you were paying to the second bill (the amount from the first PLUS the amount from the second) to the amount you have been paying to the third bill.
6. And so on and so on until all of your debts are paid off.
7. Then save the same amount of money that you were paying towards your debt.
Or pay down your mortgage or car or whatever. So you can see the benefit in this sort of debt reduction plan. If I can ever find the book in which I read this I will surely give credit to its author.