Debt Stacking – How To Manage Money

October 27, 2009 · Posted in Bad Credit Loans · Comments Off 

Are you currently trying to reduce your debt? Are you tired of making the minimum payments on each outstanding balance and don’t seem to make any progress?let’s talk about what debt stack is and how to manage money and get rid your debt as quickly and realistically as possible. What’s even more exciting is that you can even use the debt stacking plan to assist in making the retirement you have always hoped for!

What is Debt Stacking?

I have talked about this in one of my previous post but perhaps this is worth one more look. Debt stacking is an easy principle of paying off all debts in a pyramid type formula. It works and it can be easy plus you can eliminate your debt two or three times more quickly then you would have imagined.

STEP BY STEP PROCESS:

STEP 1: Make a list of all of your current debt. Put each amount in order from the least amount to the largest.

STEP 2: Set up an emergency fund in a savings account. The lowest amount you should have is $1,000. You may need it any at time, so it’s wise to have.

STEP 3: Be sure to pay the minimum amount every single month that is required on all of your debt until the first one is paid off.

NOTE: If you usually pay extra on some of your debt each month, apply that extra amount to first item (of the lowest balance) on your list. (for example if you pay $200 extra each month on item number 3 switch that amount, regardless of interest to the lowest balance)

STEP 4: When you have paid off the lowest outstanding balance, use that money against the next lowest balance (the second one) on your list. This will help speed up the amount of time it will take to pay off the second balance.

STEP 5: Repeat that same process to the next debt or until all have been eliminated. Remember you are not spending any more money and it will accelerate the process.

REMEMBER: For this to work effectively you must not create any new debt.

Here is a typical example:

TYPE:            AMOUNT:          REQUIRED MONTHLY                  INTEREST RATE:

PAYMENT:

Credit Card         $7,500                            $150                                                   16%

Car Loan          $10,800                            $350                                                8.5%

Student Loan   $14,600                            $365                                              7.25%

Mortgage          $139,000                         $940                                                    7%

TOTALS           $171,900                          $1,805                                             —–

If you only made the minimum required payments:

It would take 32 years to be completely out of debt.

In those 32 years you would have paid $205,485 in INTEREST for a total of $377,385.

If you apply the Debt Stacking Formula:

It would take just 12 years to pay off that same debt.

In those 12 years you would have paid just $86,343 in interest for a total of $205,485.

It may seem too good to be true but this is a relatively simple process that works. No changes are being made to your monthly payments, just a different approach. Every situation is different but debt stacking works for anyone.

How Debt Stacking would help with retirement:

When all of your debt is gone, take the same total minimum required monthly payment of $1,805 and invest it. Do that each month for the next 20 years. You would have been paying that amount for another 20 years anyway. If its invested at 8% you will have $1,179,533 in 20 years. Nothing in your lifestyle has changed.

In a nutshell debt stacking will dramatically reduce the amount of time it will take to pay off your debt and it will also reduce the total amount of interest you will pay AND it will help create the nest egg you have always wanted. That sounds pretty great doesn’t it?

When it comes to paying off debt you don’t always see results. It’s hard to remained focused and keep up hope when those large balances don’t seem to go away until the last few years. The key is to pay as little interest as possible so you will have more of your money in your bank account for the future. I hope this post helped you understand debt stack and showed you a little more about how to manage money.

Until next time,

Brandon

You can pay off your debts and save money at the same time! Say goodbye to your boss forever! A blog that will show you the secrets of the wealthy: http://www.howtomanagemoneytips.com

Get a free budget sheet, net worth calculator, tools and more: http://www.howtomanagemoneytips.com/ebook2.html

Article Source:http://www.articlesbase.com/wealth-building-articles/debt-stacking-how-to-manage-money-1383356.html

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How To Manage Money: Eliminate Debt Step By Step

October 2, 2009 · Posted in Bad Credit Loans · Comments Off 

Is there a way to manage money and eliminate debt step by step? Perhaps if there were a sure fire way we would all be doing it every day, week and month of the year. However, I have discovered several steps that will be of assistance and if you try and follow each as closely as possible you will be even closer to eliminating your personal debt. You can begin right now and it could change your life.

Step Number 1: Assess your current financial situation.

Are you currently in the red or black? Do you turn to the credit card to manage your money and every day purchases? This may be a definite indication that you may be in some financial trouble. Here is a free aid at the below link that may help quantify your current financial status.

moneycentral.msn .com/personal-finance/calculators/evaluate_your_debt_calculator/home.aspx

The Second Step: Analyze your spending habits.

Review your weekly and monthly purchases. Do you think that many of your purchases are unnecessary? When it comes to spending, there really is no ‘grey’ area. There are things we all need to buy and there are things that we don’t. You may need to re-learn how to manage money if you find that the majority of the money you spend is on eating out, entertainment, expensive clothes, alcohol etc. Here’s something you may want to try.

The Third Step: Budget.

I’m pretty sure I’ve mentioned this once or twice on my blog but creating a budget is probably the most important step to take. A simple way to start to budget is to sift through your credit card bill and make list that separates what you NEEDED and the things you DID NOT NEED. This should only take a a bit of time but it will show you how to manage money in a very easy way. If you want, try to go back through those bills a couple of months. The 1st thing you might probably see is that you can cut your bills by 50%! From here on in, when you are buying things down the road you now know exactly what deserves the ‘green’ light for the MUST HAVE spending and what gets ‘red’ flagged. Suddenly you have the start of a budget.

Step Number 4: Eliminate those ‘Red Flagged’ purchases.

Step 4 will take the most determination, dedication and will power on your part. The key of how to manage money is to know where your cash is going and why. You really do not need the finest fashions, or that costly bottle of wine, football tickets or that new pair of shoes if you are already having difficulty with your finances. What you really need are comfortable home and food on the table. Try to live a very modest lifestyle for a month and you will surely be shocked with how much cash you will save.

Step Number 5:  Find a low or no cost credit card.

Look at different companies but this is a very important step to take. The best way to decide where to go is if you carry a balance or if you regularly pay it off each month. If you carry a an amount that carries over  you need to find a credit card that has a low interest rate. It is extremely difficult to chip away at a balance if they charge you 18% interest or more. That money will add up fast. If you are lucky enough to be able to make the payments, use a credit card with low or no fees. The best solution is to get rid of your credit card altogether and only use it for emergencies.

Step Number 6: Consolidate your debts.

Plan this step carefully. The positive side is that debt consolidation offers the opportunity to lower your monthly payments, save on interest and may even help you eliminate debt faster. But there are downsides that must be considered like not finding out the root of your debt problem and preventing those tendencies that started the debt to begin with. You could end up paying more in the long run with debt consolidation if you aren’t careful.

Here is another free calculator that will show you how to manage money by debt consolidation.

moneycentral.msn .com/personal-finance/calculators/Consolidate_Your_Debt_Payment_calculator/home.aspx

Step Number 7: Seek financial advice.

This is straight to the point. You aren’t going to be able to know everything you need to when it comes to debt and the ways to eliminate it. These steps will be helpful but it is still wise to seek face to face advice from a professional.

The Eighth Step: Fix your credit.

Having bad credit is, well, bad. There are plenty of major purchases you will still make in the future and you must have a quality credit score to do so. Be sure to check your credit at your bank or even find out on the internet with a company like Equifax. The more quickly you repair your credit the better.

Can you manage money and eliminate debt step by step? I truly think that if you follow these 8 steps you will have the right tools to eliminate your debt. Good luck and let me know about the success stories that you have had!

You can pay off your debts and save money at the same time! Say goodbye to your boss forever! A blog that will show you the secrets of the wealthy: http://www.howtomanagemoneytips.com

Get a free budget sheet, net worth calculator, tools and more: http://www.howtomanagemoneytips.com/ebook.html

Article Source:http://www.articlesbase.com/wealth-building-articles/how-to-manage-money-eliminate-debt-step-by-step-1291791.html

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