Dragon Journal (![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png)
dragonjournal) wrote2020-08-13 12:45 pm
dragonjournal) wrote2020-08-13 12:45 pm
Debt, getting out, and the YouTube Rabbit Hole...
So, I've spent the last few days going down the debt repayment/budget rabbit hold on YouTube. And it's not a bad thing, but I still think the SnowBall Method (explained below) is still going to be my best idea to get out of debt, and save for a condo.
Let's start with a basic concept. Now, Doug Ramsey made this popular, but this is my interpretation of it, and NOT an advertisement for anything. Please keep in mind, this is my plan and will, hopefully, work for me but is not a statement of "Do it this way." Now that that disclaimer is out of the way:
This is what I'm going to be doing.
Now, I have a lot of credit card debt. The dreaded credit cards. Some, I've cut up, but not closed the accounts! Others, I'm going to be giving to someone so that they are not used, randomly.
So first, we're going to look at those totals.
Visa: 488.32
Visa: 1394.44
Apple Visa: 1197.19
Aspire MC: 1480.59
Discover: 1522.56
PayPal Credit: 1233.21
Mattress: 1005.29
So that totals out to: $8321.60. So, gotta get this under control. Now, lets look at the minimum payments:
Visa: 25
Visa: 68
Apple Visa: 29
Aspire MC: 60
Discover: 46
Paypal Credit: 34
Mattress: 38
----------------
Total: 300 - minimum payments per month.
Now, this doesn't include my student loan or car loan payments. Because, I think those are "good" debts? And they aren't the heavy balances, and will be handled seprately.
Now, my plan in September is to pay more than minimum on some of these debts. So let's look at that:
Visa: 45
Visa: 70
Apple Visa: 50
Aspire MC: 60
Discover: 50
Paypal Credit: 40
Mattress: 120
--------------
Total: 435 - So, doing this, really only "costs" me an extra $135 a month. Which, I can afford.
Now, I get paid every other week. So, I really work paycheck to paycheck. My next paycheck is on Friday August 21, 2020. This will be my budget:
Rent: 866
Visa: 45
Visa: 70
Discover: 50
Paypal: 40
Netflix: 14
Disney: 8
Apple: 50
AAA: 103
Loans: 95
Groceries: 200
Gas: 20
---------------
Total: 1561
Now, this money includes not only my paycheck (Which will be about $1170.) but also my Son's SSI (at $783).
So, this gives me a total income of: $1955. Meaning, I'll have about $394 left. Now, that has to go into a savings account, because my washer is dying, and I need a new dryer as well. So, that's going to cost about $1700. That's a little bit higher end model, but it's an investment and I know that.
Now, I'll have to do a payment plan on the washer/dryer, because I just don't think my washer will last past Labor Day. So, putting money in the bank now means paying less. I have my eye on a set, from Best Buy. It's here. So, that $70/month will be less, if I can lower the amount I finance.
Okay, that's the August 21st paycheck.
Now for September 4th:
Duke: 140
Net: 80
PF: 11
Sprint: 280
Geico: 73
Mattress: 120
Aspire: 55
Car: 285
Groceries: 200
------------
1244
This budget is a bit different. Why? No gas, no AAA. Those are not going to be needed this paycheck. Unfortunately, I don't have an estimated paycheck for this. I'm hoping to work about 116 hours for that paycheck. Now an estimated paycheck for 116 hours is: $1409. Which... Sigh, is going to make it tight because that leaves me only $165 that has to go toward the washer, giving me the total of: $559. Putting that down means that I only need to finance about $1200. So, that'll help.
But paying extra... you'll notice there's round numbers for all of those payments. Why? Because I refuse to pay the small coins, when I can put more on it.
That "extra" doesn't have to be a lot? My car payment is actually $284.05. But if I put the $0.95 toward the principal, it adds up!
And there's sometimes "extra" money. My groceries don't always come out to $200. Sometimes, they're less, and that's okay. That's just money I'm going to let sit. Because why spend it?
Now, onto my loans. I owe $2700 in student loans that has to be repaid now (the rest is in forbearance and may it stay there!) and my car loan is at $10,776. So, those are going to be my last two "debts" that I'm going to pay.
So, now to how I'm snowballing. That first Visa amount will receive my attention first, for obvious reasons. It's only $500 credit limit. So, let's look at which way I'm going with the snowball.
If I pay that off, at $45 a month (yes, that's 10 months, but that's precluding any more stimulus payments/tax returns, etc which will be used to pay that down) then I can roll that $45 into the Apple Visa. So, it'll go in this order:
Visa
Apple Visa
Paypal Credit
Visa
Discover
Aspire
This is not going to be a quick fix. It's just not. I know that, but it will be worth it in the end.
As for why I've cut up my credit cards but not closed them:
Closing a credit account negatively impacts your credit score. And, I need a good, decent credit score to get a condo. So, that's important. That's the other reason I need to pay debt down. I need to buy a condo. So, once certain things are paid, I'm rolling some of them to the next debt, but some others are going to go into savings. And then, once debt is paid? That is all going into savings. So, we'll see.
So, questions? Comments? Suggestions?
Let's start with a basic concept. Now, Doug Ramsey made this popular, but this is my interpretation of it, and NOT an advertisement for anything. Please keep in mind, this is my plan and will, hopefully, work for me but is not a statement of "Do it this way." Now that that disclaimer is out of the way:
The SnowBall Method is where you pick a debt, and pay the minimum payment plus a little extra. Pay the minimum on all your debt, but this one (usually the lowest total balance) you'll pay the minimum but also a little bit extra. Then, once that is paid off, you roll those payments into the next debt. Once the next one is paid off, you take what you paid on the first and second debt and roll that into a third. And then go on, and on and on. Depending on how many debt repayments you have, of course.
This is what I'm going to be doing.
Now, I have a lot of credit card debt. The dreaded credit cards. Some, I've cut up, but not closed the accounts! Others, I'm going to be giving to someone so that they are not used, randomly.
So first, we're going to look at those totals.
Visa: 488.32
Visa: 1394.44
Apple Visa: 1197.19
Aspire MC: 1480.59
Discover: 1522.56
PayPal Credit: 1233.21
Mattress: 1005.29
So that totals out to: $8321.60. So, gotta get this under control. Now, lets look at the minimum payments:
Visa: 25
Visa: 68
Apple Visa: 29
Aspire MC: 60
Discover: 46
Paypal Credit: 34
Mattress: 38
----------------
Total: 300 - minimum payments per month.
Now, this doesn't include my student loan or car loan payments. Because, I think those are "good" debts? And they aren't the heavy balances, and will be handled seprately.
Now, my plan in September is to pay more than minimum on some of these debts. So let's look at that:
Visa: 45
Visa: 70
Apple Visa: 50
Aspire MC: 60
Discover: 50
Paypal Credit: 40
Mattress: 120
--------------
Total: 435 - So, doing this, really only "costs" me an extra $135 a month. Which, I can afford.
Now, I get paid every other week. So, I really work paycheck to paycheck. My next paycheck is on Friday August 21, 2020. This will be my budget:
Rent: 866
Visa: 45
Visa: 70
Discover: 50
Paypal: 40
Netflix: 14
Disney: 8
Apple: 50
AAA: 103
Loans: 95
Groceries: 200
Gas: 20
---------------
Total: 1561
Now, this money includes not only my paycheck (Which will be about $1170.) but also my Son's SSI (at $783).
So, this gives me a total income of: $1955. Meaning, I'll have about $394 left. Now, that has to go into a savings account, because my washer is dying, and I need a new dryer as well. So, that's going to cost about $1700. That's a little bit higher end model, but it's an investment and I know that.
Now, I'll have to do a payment plan on the washer/dryer, because I just don't think my washer will last past Labor Day. So, putting money in the bank now means paying less. I have my eye on a set, from Best Buy. It's here. So, that $70/month will be less, if I can lower the amount I finance.
Okay, that's the August 21st paycheck.
Now for September 4th:
Duke: 140
Net: 80
PF: 11
Sprint: 280
Geico: 73
Mattress: 120
Aspire: 55
Car: 285
Groceries: 200
------------
1244
This budget is a bit different. Why? No gas, no AAA. Those are not going to be needed this paycheck. Unfortunately, I don't have an estimated paycheck for this. I'm hoping to work about 116 hours for that paycheck. Now an estimated paycheck for 116 hours is: $1409. Which... Sigh, is going to make it tight because that leaves me only $165 that has to go toward the washer, giving me the total of: $559. Putting that down means that I only need to finance about $1200. So, that'll help.
But paying extra... you'll notice there's round numbers for all of those payments. Why? Because I refuse to pay the small coins, when I can put more on it.
That "extra" doesn't have to be a lot? My car payment is actually $284.05. But if I put the $0.95 toward the principal, it adds up!
And there's sometimes "extra" money. My groceries don't always come out to $200. Sometimes, they're less, and that's okay. That's just money I'm going to let sit. Because why spend it?
Now, onto my loans. I owe $2700 in student loans that has to be repaid now (the rest is in forbearance and may it stay there!) and my car loan is at $10,776. So, those are going to be my last two "debts" that I'm going to pay.
So, now to how I'm snowballing. That first Visa amount will receive my attention first, for obvious reasons. It's only $500 credit limit. So, let's look at which way I'm going with the snowball.
If I pay that off, at $45 a month (yes, that's 10 months, but that's precluding any more stimulus payments/tax returns, etc which will be used to pay that down) then I can roll that $45 into the Apple Visa. So, it'll go in this order:
Visa
Apple Visa
Paypal Credit
Visa
Discover
Aspire
This is not going to be a quick fix. It's just not. I know that, but it will be worth it in the end.
As for why I've cut up my credit cards but not closed them:
Closing a credit account negatively impacts your credit score. And, I need a good, decent credit score to get a condo. So, that's important. That's the other reason I need to pay debt down. I need to buy a condo. So, once certain things are paid, I'm rolling some of them to the next debt, but some others are going to go into savings. And then, once debt is paid? That is all going into savings. So, we'll see.
So, questions? Comments? Suggestions?
no subject