Debt

I know, that is probably the worst 4-letter word out there, right?!  Don't worry, there is an end to your debt situation. We are not the best example of staying out of debt, I hate to confess, but we have been learning. For the last 14 years, we have been learning!

I've had many people show me different ideas of how to get out of debt. We get right to the point where we have almost no debt, except our house and cars and then something would happen, like two major surgeries in a four month time, that throws us back into that awful feeling of being in debt to someone. We have probably all been there at one time or another. The thing that worked best for us is what Dave Ramsey calls snowballing debt. Elder Marvin J. Ashton in the One for the Money pamphlet put out by the Church of Jesus Christ of Latter Day Saints, calls it a debt-elimination calendar.

Either method works great you just have to know how much each debt is and then how much extra you can pay each month.

Providentliving.org is a great resource for this. It states  "The calendar is a simple approach to eliminating debt by using funds freed up when one debt is retired to pay down remaining debt. While you have to be disciplined, this approach has helped many become debt free." 

It provides a debt calculator right there for you. Go to providentliving.org click on finances on the left side bar and then scroll down to where it says "How soon could I pay off my debts?" It's that simple, but to give you an idea of how snowballing your debts works, look at all your debts. Then look at the payoff dates and the interest rates. Some debts are very large, like your house, but have small interest rates, and some have a very small amount but high interest rate. You don't want to pay others your hard earned money any longer than you have to, right? Also look at your minimum payment for each month.

Say you have 5 different debts you want to get rid of, start with the One with the highest interest rate, that's usually credit cards. This is the one you will pay off first. Now all of your other ones still matter, you don't want anything going to collections, but on the others, you will just pay the minimum balance due, for now. Anything extra left over from your budget, you can put to this debt to help it to go down faster. When that first debt is paid off, you then take that full amount you have been paying to that debt and roll it into the next debt, getting that debt down much faster, and so on until you no longer have any debt.

Elder Ashtons debt elimination calendar on the other hand, has you write it out by months. Say your credit card that you pay $100 to each month will be paid off in March, after you no longer have that debt, you then take that $100 and add it the next debt and when that one is paid off, roll that whole amount you were paying to the next and so forth, thus eliminating your debt so much faster than if you just keep paying the minimum balance each month.

I hope this is all making sense to you. Debt can be a very overwhelming and frustrating thing, especially when you have no control over it, like medical expenses, but I know with some faith and sacrifice, you can become debt free!

One thing that has worked for helping us not get further in debt is giving ourselves an allowance. There is always things that we want and need, and that's usually how we go into debt so quickly and easily. We give ourselves, my husband and I, each $50 each month to use with how we want. If we have found something we want, we save our allowance and buy it when we have saved enough. We also budget a little each month for some of the smaller expenses that creep up, like furnace filters, paint, etc, that way it's not just going on our credit card when we need it to pay off later.

I firmly swear by and believe in a budget and staying out debt. Don't be in bondage to someone else for wanting something you can't afford now. Save and budget and all will work out for your good! Rely on the Lord and he will help you through those hard times!