Frugal Friday: Getting Out Of Debt

One of the things I have learned from my twenty years of direct sales

 (yes, I have been in Tupperware that long!)

is how to manage money.

We are given Business Owner tips and training that apply to many areas of life, outside our business.

SOOOOO many people need help with this!

They are facing a mountain of credit card debt, struggling to make their house payments,

 having a hard time buying groceries, unable to buy clothes for their children, and more.

It just breaks my heart.

Life is about choices, priorities, if you will.

It is what we choose to do that can make the difference!

Some people make good choices, some people aren't as savvy.

It can be the smallest things that make a huge difference.

Did you know, that if you cut your spending $3 a day and deposited that $90 each month,

with a 3% interest rate (trust me, it WILL go back up)

 you would have $23,000 in just fifteen years?

That $3 could be the daily coffee from Starbucks,

the half pack of cigarettes you smoke a day, the McDonald's drive through...

again, a choice to make.
It really is that easy to make a difference in your savings.

 

How about this sobering fact: 

If you have $4000 in debt with 18% interest,
in four years it will double according to the "Rule of 72".

This takes me back to a high school Economics class
(we just wont say how long ago that class was...).
Take the number 72, divide it by the interest rate,
you end up with the number of years for the money
(balance makes no difference) to double.

It works for debt as well as savings.

 

Sadly, the average American home has at least $10,000 of credit card debt.

 

What do you do?

 Payoff what you owe first or start saving for your future?

 

Both.

 

Even just one dollar a day tucked away can make a difference in your savings.

I know you are on the way to cutting your bills dramatically with your coupon clipping and meal planning (if not, get your hiney to one of my classes!) so you now have a little more room in your family budget.

 

Think about a change jar: NEVER spend your change, just dump it in the jar.

When that jar is full, take it to the bank and pop it into the savings account.

Saving is important, but with the interest rates so low right now,

you can impact your family more by paying off your debt...that is your main focus.

If you haven't done it yet, make a list of what you owe...

the highest balance at the top of the list.

I warn you, it can be shocking to see it all down on paper, if you haven't done it before.

There are many different ways to focus on this...

Some say make minimum payments on all but one -
that one gets double or triple payments until it is paid off.

One "expert" says pay on the highest interest rate,
another says the highest balance, another the smallest balance.
Depending on who's book you read, you get a different answer and it can drive you nuts.

I would aim for the highest interest rate.

If you only make 1% in your savings,
why do you want to keep paying 18% to someone else?

You don't.

Pay that puppy off first, cross it off your list, and start on the next one.

The money that was going to that now paid off bill, gets ADDED

 to the minimum payment you had been doing for the next bill on the list.

You are used to spending that money anyway, keep putting it to a great use!

Soon that one will be paid off, and what you were spending on it,

you can add to the amount you were paying on number three.

Can you see how you will pick up momentum as you pay things off?

Have a small celebration each time you get to cross a debt off your list!

When you have everything paid off,

start using that money to enhance your savings!

Build that emergency fund, add to your IRA, pump up that college fund for your kiddo -

whatever is the next most important thing on your list

Does this seem like a daunting task to undertake?

Just keep in mind that Rome wasn't built in a day...

it took time to build a little debt, and will take a little time to pay it down.

You can do it!

(Now get that change jar started)