Debt is a hard thing to live with, but we all have it and deal with it everyday. Sometimes it is manageable, sometimes you feel like you can barely keep your head above water and unfortunately many times you feel like you are drowning in it!Is there a way to get out of debt without getting a second job or having to increase your income in some way? Can
average person take his or her current income and pay off his or her bills in a matter of a few years, including car and mortgage payments?
The answer is YES!!! You can do it without having to cut out all of your fun and extra-curricular activities as well. Now, you may need to cut down on going to movies or going out to eat, but you will not have to stop altogether. It is a matter of putting together your plan and then sticking to your plan!
The process is fairly simple, most people just don't realize it. Anyone can get started right away, including YOU right now! Here is what you need to know:
1. What is your total net income? 2. What are your debts and minimum monthly payments? (Don't include any extra money you are paying towards any debt. You want only your minimum required monthly payments.)
Okay, are you ready to begin?
The first thing you need to do is take a percentage of your NET income (a good beginning point would be 5%) and write this amount down at top of a blank sheet of paper.
Next, write down each of your debts (not including utility bills, insurance payments, property taxes, etc.) in a column at left side of your page. Beside each debt, write down your total balance and then your minimum monthly payment.
Once you have all of these down, divide your total balance by minimum monthly payment. Write this amount next to each debt. Taking debt that has shortest payoff number, number this number 1. Taking next shortest payoff, number it number 2 and so on until each debt has a number next to it. These numbers indicate order in which you will begin to pay off your bills.
Now, here is where your 5% comes into play. For debt number 1 take minimum monthly payment and add it to 5% figure. Divide total balance by this new amount to get total months it will take to payoff debt. For debt number 2, you will take minimum monthly payment plus 5% plus minimum monthly payment of debt number 1 (since it will be paid in full) and add them together. Again take total balance and divide it by your new monthly payment to figure your total months to payoff. Do this with each debt until you are finished.
