Plan of Action

Posted on November 23, 2007
Filed Under budget, debt, plan |

There are several ways to attack debt. There is Dave Ramsey’s Debt Snowball or Mary Hunt’s Rapid Debt Repayment Plan. The Snowball plan is to pay off your smallest debt first so that you gain a feeling of accomplishment. This method has worked for me before and it may be the one I go with now. The RDRP plan is to take the debt with the shortest repayment time and pay it off first. Once you have paid it off, you reallocate the payment to the next debt and so on. My struggle is going to be increasing my income/slashing my spending enough to make at least minimum payments on everything and still work to reducing the overall debt.

Debt
My approximate debt load right now is:

Mortgage 87, 900
Business Loan 17,500
Credit Card 1 800
Credit Card 2 880
Credit Card 3 700
Revolving Account 8200
Personal Loan 4200

Either with the Snowball or the RDRP my first target account will be Credit Card 3. It is both the smallest and has the shortest repayment time.

Budget

I am going to use Dave Ramseys Envelope System to budget my household expenses… groceries, gas, oil, etc and quit using my debit card which seems to get me into trouble. I spend more and have much more trouble tracking my spending. I am also going to check into reducing some of my bills such as telephone, internet, etc. I should be able to reallocate about $50 a month to either savings or debt reduction that way.

Savings

While it seems very little, I am saving my change daily and at the end of the month this will go into a savings account. In addition to this, I am going to put my Shaklee bonus check into an emergency fund every month. My Freedom Account is going to have to wait until I can increase my income.

Income

I am going to do a couple of things to increase my income.

Concentrate extra business funds on advertising rather than retail.
Spend at least 4 nights(preferably a month doing Shaklee events to increase volume and bonus.

Well, wish me luck! Christmas is coming and it’s hard to stick to any budget in December. Thankfully, my kids are old enough to understand and I am sending them this blog so maybe their gift will be to learn from my mistakes.