dumping debt

Okay folks, it's time for another installment of Financial Peace...

This time dealing with Dumping Debt! Something that most of us need to focus on. If you're one of the lucky ones with no debt to your name, feel free to skip this "lesson"...

Here are some TRUTHS:
:: Loaning money to a friend or relative will strain or destroy that relationship.
:: The bank requires a co-signer because the person isn't likely to repay.
:: Never never use Cash Advance, Rent-to-Own, Tote the Note Car Lots.
:: Lotto is a tax on the poor and people who can't do math.
:: Car payments are NOT a way of life.
:: Leasing a car is the most expensive way to go.
:: A new car loses 60% of its value in the first 4 years.
:: Open credit card accounts with zero balances count against you.
:: You only need a debit card, not a credit card, to rent a car.

GETTING OUT OF DEBT:
:: Quit borrowing more money!
:: You must save money.
:: Sell something you don't need.
:: Part-time jobs help.
:: Debt Snowball

So...if you have accomplished Step #1, which is to save $1,000 in an emergency fund, then you can begin the Debt Snowball...ONLY if you've accomplished step #1.

DEBT SNOWBALL
:: List your debts in order of the amount you must pay on them, from SMALLEST to LARGEST. If two debts have the same payoff, list the one with the highest interest rate first.
:: Next time you pay bills, pay the MINIMUM on all of the debt payments except for the first one. Any and all extra money you have that month goes toward this first debt listed. You continue to do this until the first debt is eliminated. Slam that sucker! All extra money goes to it, and then it's gone!
:: Once the first debt is eliminated, put the minimum payment from the FIRST debt (the one you just eliminated) toward the second debt, thus increasing the payment you send to the second debt. Plus, put all extra money for the month toward this payment as well. So that's the minimum payment necessary for the second debt, the minimum from the now eliminated first debt, plus any extra money. Slam this second debt until it is gone, and then repeat the process.
:: As more and more of your debts are eliminated, that means you have more and more and more money to put toward the next debt. It begins to snowball fairly quickly.

We've had to use the money we had saved up for our emergency fund, so we're back to square one, Step #1. But once that's attained, we're going to start this snowball...and we'll see how it goes...

Good luck to you!