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.
5 comments:
They put a lot of names on this particular model. For most it is known as the Debt Snowball. I have found the best calculator/chart tool is over at http://www.whatsthecost.com/snowball.aspx
This one is unique because you can do minimum, fixed payment, interest order, balance order, a number of ways to look at it. I've tried to do things like this in the past and it doesn't work well for me. Something comes up that throws me off, and ruins the whole plan. I'm tempted to go with a debt consolidation method and treat it like a term loan since you have to pay a set minimum monthly payment. To each their own, good blog though.
OMG!! I took a community ed class on that EXACT plan a few years ago. I just ran upstairs to get the book they gave out... It's Debt-FREE & Prosperous Living (Basic Course) by John M. Cummuta.
I wonder if it's the same one?
I use the software found here (www.youneedabudget.com) for our budget. It REALLY works for us. We have the pro version. We've been using it since March of last year. It's made a big difference.
As to your fear of coupons, may I suggest www.thegrocerygame.com? Seriously, go to the Web site and check it out. It's $1 for a four-week trial. They tell you WHEN to use your coupon, so you don't have to wonder.
I get referral credit for people who sign up, so if you decide to give it a try and want to do so, give me a shout, and I'll give you the e-mail address I use for The Grocery Game. I've been doing The Grocery Game since July of 2006. It's really great.
If it was called the Rapid Debt Repayment Plan - or RDRP - it is probably from Mary Hunt's book Debt-Proof Living. She has written several other books and has a website with an online magazine that I enjoy at www.debtproofliving.com.
Good luck in establishing a budget and getting out of debt!
:) Angie
Angie,
Thank you! That is the author of the book, but I can't remember the name of the book. But I just checked out her website and found her story. It all rings a bell with me! Thank you again and thanks too for stopping by!!
Queen Mommy
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