No Debts, No Regrets

These days you can get free help on the internet for practically anything. A friend of mine took her Toyota in for State Inspection and maintenance. She also was having problems with her thermostat and asked them to check that too. The dealer called her and said it would cost $900 to replace the thermostat. “No way” -she said. So she looked it up on the internet and found a forum where some guy had fixed it himself. He posted instructions on the fix, including uploaded pictures. The dealer said they do not fix them they only replace them. So she was able to print them off and take them to a mechanic who would fix it- for $150! Knowing her, I’m surprised she didn’t go out and buy a soldering torch and fix it herself!

When she got her car home from the dealer, she noticed they hadn’t turned off the check maintenance light on the dash. Back to the internet she went, found the instructions, and turned it off  herself.

That’s what I love about the internet- especially the blogs and forums. There is such a commaraderie there. That a guy who fixed his thermostat on his own, would take the time to explain in a post and upload pictures too, so the rest us would not be fleeced is such a wonderful thing. And in case you are having this heater problem too, here is the link. This fix applies to many of the models.

That is why I’ve posted my Debt Buster spreadsheet, and why I will answer any questions people have about it who want to use it. It is really working for me and I just want to share it. Most people do not have to pay for professional help to get out of debt, and they don’t have to pay for debt consolidation either. You’re in debt. So your going to go into more debt to get out of debt? I don’t think so! Use some kind of debt payoff spreadsheet, even if it isn’t mine. There are so many free ones you can use. Then visit the get out of debt blogs for advice and to feel like you are not alone in your struggle. Check out the blogroll for other blogs I like.

When you’re trying to become debt-free, the last thing you need is to pay for tools and services to accomplish this. Fortunately, you don’t have to because there are a number of tools available to you which are totally free. However, most of them will take a considerable investment of your time to set up. But if you are really serious about getting out of debt, then you have probably already decided to commit a decent amount of your time to this effort.

1. If you are not already using on-line banking and bill-pay you should set that up right away. Again, this will take time, because you will have to enter the names, addresses and account numbers for every account that you have. Once this is done however, you can easily pay a months worth of bills in just a few minutes. Most bill-pay tools will keep track of what you paid for each account for the past several months. They will also deliver statements directly to your bill-pay for most major financial institutions and utilities. One of the best features, is being able to set up alerts, when deposits are made, or when your balance goes below a certain amount. This is a great feature for couples, where one person does the bill paying, both spouses can be notified. That way the spouse who is not paying the bills is still aware of what is going on financially.
2. There are online services available that will pull all of your financial accounts together in one place. The one I use is Mint.com. Again, this is a service that can be time consuming to set up, but has a huge payoff. When you are all done, you will see all of your checking and savings balances, all of your credit cards, your mortgage, and your investment accounts summarized in one place. On any given day, you can see the total of exactly what you owe, what you have in the bank, and your net worth. Mint.com has a weekly financial summary feature, that is a report that they will email you of your weekly standing. This can be set up to be sent to more than one email address, so that again, the spouse who is not tracking the finances can still receive a weekly report and stay in the loop.
3. The Debt Snowball spreadsheet  is another tool that you can find all over the internet, but here is a link to one to save you time. The basic concept here is that you plug in all of your credit card balances, payments, APRs and the amount you can pay extra every month.  As each card gets paid off the amount that was paid monthly into it will get rolled into the monthly payment for the next one, hence the “snowball”. You can choose two options, either lowest balance first or highest interest first. I like the first option, because of the wonderful feeling you get from paying off a few low-balance credit credit cards. The spreadsheet will compute the exact day that you will have your credit cards paid off. This is a great inspiration builder for the days that you feel like you are not getting there fast enough. The only problem is, that it assumes you will be able to pay the same amount every month, when in reality that is usually not possible.
4. Finally, the Debt Bust spreadsheet is the tool that I developed for my self, that allows me to set up a budget for a year. You can plug all of your debts into it, but also your monthly bills and expenses. It will compute your monthly balances and also how much debt you paid off for the year. There are many similar spreadsheets around the internet. The difference is with mine, you can post any questions on the site and I will help you with it.

I personally use all of these tools together. None of them are a magic bullet, but each of them offer some unique features that will help you get on track with your debt-free goal.

Once you decide you are finally going to do something about your debt there are some ways that you can jump start the process. When you visit many financial sites, you will read a lot about the $1000 emergency fund. But what if your debt is so crushing that you simply can’t spare even $20 per month to build your emergency fund? The reason the emergency fund is so important is that when (not if) something comes up that is unexpected, it will keep you from adding to your credit card debt. So you really do need to get it established right away.

Below are five steps you can take to jump start the process:

1. The first and maybe the most important step is to treat your getting out of debt process like a part time job or hobby, by spending 10-20 hours a week on it. This will include setting up your Debt Buster spreadsheet , and then focusing in on the next four steps below.
2. If you have a lot of credit card debt, you probably have some quality stuff sitting around the house that you can sell like exercise equipment, electronics,etc. Post some of these items on CraigsList  (look up your city) and you can make  several hundred dollars very quickly.
3. Sell your old gold jewelry. This could also yield several hundred dollars depending on the quality and quantity of your pieces. Express Gold is the site I used.
4. Cut out one of you indulgences completely for 6 months. Dining out, cable TV, concerts etc. Any one of these should yield at least $500 in 6 months
5. Trade your car down for a cheaper model that gets better mileage. This doesn’t work for leased cars, but if your car is financed or paid off it will. Find a good late model used car with an excellent repair record (check consumer reports for this). You may very possibly save 3 ways by this one action alone:
   1. Reduce or eliminate your monthly payment
   2. Reduce your monthly gasoline bill
   3. Reduce what you are paying in maintenance

Are these steps far fetched? Absolutely not! I did everyone of them myself and had my $1000 emergency fund in no time. I started my Debt Buster spreadsheet. I sold off a trampoline that nobody was using in my house to a young couple who was thrilled to get it. I went through my out of style jewelry and sold it on ExpressGold.com for a quick $500. Then I traded in my BMW for a certified Scion and brought my car repair bills from thousands a year down to $200. All in about a month.

The results were so satisfying, I repeated the whole process again, made enough cash to pay off my lowest balance credit card. Pouffe!

Getting out from under a mountain of debt can be very slow going at first. In fact, you may feel at times like you are hardly making any progress at all. This is where the Debt Buster spreadsheet really shines. Once you get your twelve months of data into it, you are able to project where you will be a year from now.  How much each loan balance has decreased by and how much your savings balance has increased by. I really needed to see this projection, so that I could stick to my plan, because the first few months barely made a dent.  When you feel like you’re running in place, it is good to know that you will finally get to where you want to be. Debt Free!