I've been asked a couple of times about my five year plan, so I thought I would share it. It's pretty simple.
Basically I used this site to calculate how long it would take to pay each of my credit cards loans off. I took the money from the first debt paid off and put it on a second debt. Then when the second is paid off, I take the money from the first and the second to apply to a third. And so on. Eventually I am able to apply quite a bit of money to each debt.
In eight months, I will have my first debt paid off. The money from that and the money I'm already applying to my second debt will speed up the pay off on the second. That will take place five months after the first one. The third will pay off six months after that. The fourth will pay off three months after that. And so on.
Also part of the five year plan, I started putting a little money each week into my savings account. I put it in there before I pay my bills or use any spending money. I've made a vow to not touch the account unless an emergency arises. I have a goal, but even if I don't reach it, I will put something in it each week. It's a commitment that I'm making to my future. When enough money is in there, I may place it in a CD since that gives a better rate of return, but right now, just savings is a good thing.
Of course, I'm aware that an emergency could wipe away the account as well as blow my plan to bits. But as the account grows and the debts lessen, I will be better able to weather what may come.
I also have a monthly budget that tracks my income and expenses each month. I made a vow to follow my budget. I think the time I've spent in Weight Watchers helped me learn how to deny myself a current minor pleasure for something better in the future. I've always lacked financial self-discipline, allowing my emotions to make financial judgments for me. I've not conquered that completely or even mostly, but I'm getting there.
I confess that I get discouraged about it. Sometimes it seems five years is a long time, but there are no shortcuts. And if I don't do it now, these problems will continue to hang over me. I'm not going to have that happen. I deserve better. You do, too. Let's find that better life together.
3 comments:
Cheers! That's exactly what you need to do to overcome debt! Hooray for YOU!!
This is what all the money gurus teach -- Dave Ramsey and Suze Orman for two. The one thing that I've seen that differs is how to prioritize the debt list. My preference is to follow Suze's advice to pay off the highest interest rate debt first, then the next highest and so forth. Dave Ramsey wants to encourage progress, so starts with the smallest debt first and the rest come in increasing order.
The point, of course, is to continue to run the race, to persevere until you reach the finish. I like balancing debt reduction with a growth in savings. It worked for me, I can attest.
We could each stand to build a five-year plan in some area of our lives... I'm working on mine.
You can do it. Sending encouragement vibes in your direction.
It may seem like a long time to pay off the debt, but the time will pass the same regardless of your action. The only question is will you be debt free then or wishing you had stuck to the plan. You can do it.
Randall
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