When we look to take care of an issue or fix a problem, we’re all going to attack it first in a way that we’re most comfortable with and that we feel confident will work.
Why do we do that?
Mainly because somewhere in our life we saw something that gave us information on how to deal with this type of an issue or problem. And even though we may never have dealt with it before we all know that what we’re about to do is the right way, because it’s our way!
That is until something goes wrong. Then we go to Google, or somewhere similar, and start searching for answers. Not that we find the necessary answers to help us there. The main thing to remember is that all the information available on places like Google is that they’re either an advertisement or they’re personal information that someone else is sharing on how they will recommend dealing with a similar situation.
Again, the answers found will not be specific to our situation since they are not our situation!
All we can do is review as many different situations as possible to decide what might be the best way to attack the issue or problem that we have. Even then there may be other complications that weren’t accounted for in our research.
That’s why I’ve always found working with a coach or mentor is especially helpful, especially on personal finance problems. This is something that we offer to anyone looking to improve their financial situation and looking to become financially independent!
On the road to financial independence after having grasped a good handle on where and how our money is being spent, it’ll be necessary to remove extra credit cards balances and outstanding loans.
There are different ways one will find to attach this, but I’ve always found it most beneficial that when I want to begin paying off the credit cards or loan payments it feels best to begin with the account that has the lowest balance.
Being able to pay this off as quickly as possible not only gives me the satisfaction of having accomplished something, but it provides me a feeling of being on right track and that things won’t be as difficult as I might have initially thought.
Many people will be paying the minimum monthly payment, or something close to that to keep the household afloat. Now that there is some extra money available due to the removal of wasteful spending, this extra money can be applied to that account with the lowest balance.
For example, you had a credit card with a balance of $600 that required a minimum payment of $15 per month. With interest, let’s say at 18%, and no additional use of the card you would be able to pay that balance off in about 31 months.
Double that payment to $30 and the balance is payed off in 18 months. Triple the payment to $45, and the balance is done in 12 months. From this you begin to see what happens by increasing the payment amount depending on what’s available.
You see how quickly just a few dollars can change things. Depending on how much has now been made available through the removal of wasteful spending will determine how quickly some of these accounts will be removed from ones accounts due.
And once a specific account is paid off, we need to roll over all the money that had been going to that payment into the next account we want to pay off. What a huge difference that will make as it speeds removing that account too!
This process will then continue until all credit cards and loans are paid off. Depending on the number that are owed, this might take from two to five years.
Don’t start thinking how long that is, consider how long it would have been if this change had not been enacted! Remember our example above? That was just over two and a half years without further use of the card.
Also, we need to remember how quickly we can put ourselves into the position we may be in without even realizing it. A few swipes of a card and a couple signatures may not take long to put us really deep in the hole, especially when they take place around the same time.
Without paying attention to where we’re at and how we’re going to get through it all, the problem of not enough to pay for it doesn’t hit us until it’s too late.
Believe in yourself,
Warren La Duke