I agree with your order but do you mind if I ask a question? What if getting caught up takes so long your debt gets even bigger? Should paying debt off be prioritized higher to get it under control?
@burnabygirl8541 Yes, well ... this is not originally my list but its become so very long that it might as well be and I have NO clue who/ where it came from. I have found that often to get one step done or just to maintain it you must be working on the others simultaneously. First add no more debt. This is reasonably pivotal to the whole group of activities leading to getting out of debt. Also, often each line item in your budget must be treated a little independently if you're starting from a chaotic ?mess.
@burnabygirl8541 Often debt is treated like a line item account of a total sum by the creditor. If you can get the currently used amounts paid on time and get the creditor to accept that amount, you can keep the account open long enough to keep juggling other funds. Paying the currently used amounts and also the current bill amounts on all your bills also gives you enough time to write a line item budget then start reducing it by eliminating line items or reducing the amount of line items; and/ or add income. A debt profile includes a number of things but it does include a listing of the debts, thier interest rates, thier minimum payments, and how each debt is structured (the terms of paying the debt back). Sometimes due to a person's debt profile it is actually wise to pay off a small debt before getting caught up on all the bills and debts first. This in turn returns that debt's minimum payment to the budget reducing how far the income is spread out; the end result is that you can get more traction or foreward movement on not adding more debt, getting the current bills paid on time, getting caught up, and of course is succeeding in reducing debt at the same time. What is somewhat common however is that getting caught up does reduce debt at the same time.
@burnabygirl8541 What the straight snowball and even my list doesn't take account of are prioritizing debt and also interest. The question i consider is, if you were to completely default on a particular debt(s) this letting it go to collections, which would be the least damaging to your every day life? My predjudice is that you could live forever with never being allowed to use say a Victoria Secrets credit card better than being evicted or losing your house. Likewise you can live without say Netflix or even cable TV better than living in your car or worse as a homeless person.
@burnabygirl8541 Are ypu talking about student loans that keep,getting bigger despite paying the minimum payment? If so, do tprezlkze that the minimum payment can be just big enough to keep you out of default but not even cover a full month's interest charge.
Your LOC documents should tell you how long it'll take to pay off the debt making minimum payments. I think you may have miscalculated because I don't think you accounted for the fact that interest will continue to accrue month over month. Check your documents. Good luck! Using basic math and not knowing the structure of your loan, you could theoretically conclude that with a $25,000 principal loan amount and a 10.15% annual rate, you'd accrue 2,500/yr or $200/mo in interest payments. Also I got out of debt following Dave Ramsey's Financial Peace University plan. 1st: You save $1000 mini emergency fund. 2nd: You pay off all your debt as fast as possible (no saving during this period). 3rd: You contribute to a full emergency fund (3-6 months expenses). 4th: Then you start saving and contributing to retirement. (That's 4 steps out of 7).
I'll check the LOC documents and see if I can find somewhere that tells me a timeline. I most likely did miscalculate something, math and I don't get along lol For the 1 through 4 year pay off amounts I used a spreadsheet someone else made that takes into account accrued monthly interest. I have no idea how to calculate that on my own so if the spreadsheet is wrong I don't even know where to start to fix it. In the Dave Ramsey plan, in Step 2 the no saving, does that include not saving money in a sinking fund for an upcoming large yearly bill (ex. car insurance) or is that no savings for emergencies etc. ? Thank you so much for your math help and pointing out I may have made an error, I appreciate all the help people are offering. :)
@@burnabygirl8541 It does include sinking funds for upcoming expenses only. It doesn't include saving for the future during that time. It's his philosophy that your income is your largest wealth building tool and when your income is going toward debt, it isn't being properly utilized. So paying off debt is priority. Once the debt is gone, you've freed up so much of your income and can really start making substantial progress toward your goals.
@noelmilleryoga5993 Thank you for explaining that. :) It does make sense, I am well aware how slowly I am able to save or invest when so much of my money is going to debt.
Are you able to reduce your sinking or cash envelopes at all to open up more money? Maybe the LOC reduction journey has to be 5 years instead of 4 - what do the numbers look like at that point? Even if the journey is longer the goal is to get it paid off and you can only do as much as you can afford. I'm sorry the numbers didn't work out as you were hoping, you'll figure something out in the end. Thank you for sharing. Edited to add: I watched a more recent video and I see that the minimum for the LOC has to be the 4year level. Darn!
Hi, thank you so much for the ideas. You're right, the minimum payment has to be the four year level, if I could lower it to a five year pay off rate I'd do that as it would still get me where I want to go it would just take a bit longer. I'll look at my sinking funds and cash envelopes to see if I can cut them more. I thought I already had but there must be more I can cut from somewhere. Thank you for suggesting that, I wasn't even thinking about trying to edit them again. Also, thank you so much for watching and commenting, I really appreciate it! :)
New subscriber here. I’m on a debt payoff journey as well. I agree with one of the other comments. You might look into Velocity Banking.
First add no more debt. Second pay current usage amounts and bills on time. Third get caught up. Fourth pay down and off debt.
I agree with your order but do you mind if I ask a question? What if getting caught up takes so long your debt gets even bigger? Should paying debt off be prioritized higher to get it under control?
@burnabygirl8541 Yes, well ... this is not originally my list but its become so very long that it might as well be and I have NO clue who/ where it came from. I have found that often to get one step done or just to maintain it you must be working on the others simultaneously.
First add no more debt. This is reasonably pivotal to the whole group of activities leading to getting out of debt. Also, often each line item in your budget must be treated a little independently if you're starting from a chaotic ?mess.
@burnabygirl8541 Often debt is treated like a line item account of a total sum by the creditor. If you can get the currently used amounts paid on time and get the creditor to accept that amount, you can keep the account open long enough to keep juggling other funds. Paying the currently used amounts and also the current bill amounts on all your bills also gives you enough time to write a line item budget then start reducing it by eliminating line items or reducing the amount of line items; and/ or add income.
A debt profile includes a number of things but it does include a listing of the debts, thier interest rates, thier minimum payments, and how each debt is structured (the terms of paying the debt back). Sometimes due to a person's debt profile it is actually wise to pay off a small debt before getting caught up on all the bills and debts first. This in turn returns that debt's minimum payment to the budget reducing how far the income is spread out; the end result is that you can get more traction or foreward movement on not adding more debt, getting the current bills paid on time, getting caught up, and of course is succeeding in reducing debt at the same time.
What is somewhat common however is that getting caught up does reduce debt at the same time.
@burnabygirl8541 What the straight snowball and even my list doesn't take account of are prioritizing debt and also interest. The question i consider is, if you were to completely default on a particular debt(s) this letting it go to collections, which would be the least damaging to your every day life? My predjudice is that you could live forever with never being allowed to use say a Victoria Secrets credit card better than being evicted or losing your house. Likewise you can live without say Netflix or even cable TV better than living in your car or worse as a homeless person.
@burnabygirl8541 Are ypu talking about student loans that keep,getting bigger despite paying the minimum payment? If so, do tprezlkze that the minimum payment can be just big enough to keep you out of default but not even cover a full month's interest charge.
Your LOC documents should tell you how long it'll take to pay off the debt making minimum payments. I think you may have miscalculated because I don't think you accounted for the fact that interest will continue to accrue month over month. Check your documents. Good luck!
Using basic math and not knowing the structure of your loan, you could theoretically conclude that with a $25,000 principal loan amount and a 10.15% annual rate, you'd accrue 2,500/yr or $200/mo in interest payments.
Also I got out of debt following Dave Ramsey's Financial Peace University plan. 1st: You save $1000 mini emergency fund. 2nd: You pay off all your debt as fast as possible (no saving during this period). 3rd: You contribute to a full emergency fund (3-6 months expenses). 4th: Then you start saving and contributing to retirement. (That's 4 steps out of 7).
I'll check the LOC documents and see if I can find somewhere that tells me a timeline. I most likely did miscalculate something, math and I don't get along lol For the 1 through 4 year pay off amounts I used a spreadsheet someone else made that takes into account accrued monthly interest. I have no idea how to calculate that on my own so if the spreadsheet is wrong I don't even know where to start to fix it.
In the Dave Ramsey plan, in Step 2 the no saving, does that include not saving money in a sinking fund for an upcoming large yearly bill (ex. car insurance) or is that no savings for emergencies etc. ?
Thank you so much for your math help and pointing out I may have made an error, I appreciate all the help people are offering. :)
@@burnabygirl8541 It does include sinking funds for upcoming expenses only. It doesn't include saving for the future during that time.
It's his philosophy that your income is your largest wealth building tool and when your income is going toward debt, it isn't being properly utilized. So paying off debt is priority. Once the debt is gone, you've freed up so much of your income and can really start making substantial progress toward your goals.
@noelmilleryoga5993 Thank you for explaining that. :) It does make sense, I am well aware how slowly I am able to save or invest when so much of my money is going to debt.
Hello, New sub 😊 on the credit card payoff journey had to pause to get my emergency fund. Here for ur journey.
Thank you for watching and commenting 😊 I totally get having to pause the debt pay off to accomplish other goals. I hope your budget is going well!
New subscriber. Great video. Good luck
Hi! Thank you for subscribing and commenting! :)
New subscriber here I can’t wait to see your journey
Thank you so much, I hope the journey gets me to debt free! :)
Are you able to reduce your sinking or cash envelopes at all to open up more money? Maybe the LOC reduction journey has to be 5 years instead of 4 - what do the numbers look like at that point? Even if the journey is longer the goal is to get it paid off and you can only do as much as you can afford. I'm sorry the numbers didn't work out as you were hoping, you'll figure something out in the end. Thank you for sharing.
Edited to add: I watched a more recent video and I see that the minimum for the LOC has to be the 4year level. Darn!
Hi, thank you so much for the ideas. You're right, the minimum payment has to be the four year level, if I could lower it to a five year pay off rate I'd do that as it would still get me where I want to go it would just take a bit longer. I'll look at my sinking funds and cash envelopes to see if I can cut them more. I thought I already had but there must be more I can cut from somewhere. Thank you for suggesting that, I wasn't even thinking about trying to edit them again. Also, thank you so much for watching and commenting, I really appreciate it! :)
Velocity banking is may help you…
I haven't heard of that before, I'll go google it and see what it is. Thank you for your suggestion!