Debt Free Plan – The Begining

**DISCLAIMER** I am in no way an accountant, financial adivsor nor do I have any certifications, linceses by state or local laws. I have no credited educational background in finances. I am not guaranteeing that the following advise will be 100% successful! I am not promoting ANY business nor am charging ANYTHING to ANYONE. Any thing that you the READER take and do in your own finances CANNOT hold me legally accountable of any losses or gains.

My finanical Background:

 I worked in the military for 10 years and a Federal Civilian employee for 2 years. I started in managing my units funds and from there I progress to forecasting 5 year budget plans, contracting, merging accounts, purchasing and analysis with other budget requirements that help saved the military funds and implement muti-million dollar contracts. My experience varies from handling, transferring and making payments to and from Navy fund (Blue Dollars), Marine Corps Funds (Green Dollars), Donations, Open Contract ( military system), Credit Card purchasing and the usual ordering software system that the military uses.  

This experience with the help of a friend helped me to accomplish managing my personal funds once my husband and I decided that I would be handling them primarily. It was a long process but with our mutal agreement and my experience and guidance we managed to clear 98% of our debt in 3 years. I say 3 because before then my husband and I both handled the finances and even though we were lowering our debt it wasn’t making the impact we both wanted.
So a few weeks ago I posted a link about Financial Freedom and How we achieved it, I gave a general overview as to what my husband and I used (mentally and emotionally) to get out of debt. Grant it I also said that not all plans are guaranteed, lets face it Life isn’t guaranteed so you need to make sure you remind yourself that any plan you give yourselfl; it has the possiblity of changing. Below are just simple rules or guidelines we set oursleves to help start the process:

1. Chose only ONE spouse to manage ALL financial transaction. This includes but not limited too:

      credit cards, student loans, car loans, insurance, medical, food, vacations, clothes, gas, etc.

2. You and your spouse need to realize is that your financies are a BUSINESS! YES! You are investing in yourselves and your children’s future so why not treat it as you would any business transaction or your place of work.  Before planning  both of you make your own list PRIORITZING the needs of the FAMILY. If you have children and they are old enough to understand what you are trying to do include them too (this could also be a great way of teaching them how to handle money BEFORE they go to the “real world”). 

Take emotion out of your income and what bills you have and I swear to you it will be easier to make financial decisions in the future.
3. Once you have decided who is managing the finances and condense your list Its time to make a simple ledger or excel spreedsheet ( any type of paper or software that allows you to make changes as you go) of the Monthly Expenses of the home. Include ALL EXPENSES NO MATER HOW SMALL YOU THINK IT IS! Yes hygiene supplies, school supplies, clothes, fast food splurges or moring starbucks coffee! EVERY CENT COUNTS!! 

You want to first STOP PAYING THROUGH AUTOPAY!! Some companies if you don’t pay attention might give you fees that can make your bill higher or they change the date on when they take out the money out of your account (thats why between pay checks you might see the “budget” lower then the usual). A couple of dollars or cents goes a long way when trying to get rid of debt.

3(a) Once you have that list with the monthly expenses make a list of the income coming in a month. DO NOT COMBINE THESE AMOUNTS IF YOU HAVE MORE THEN ONE INCOME! Salary based (much easier) add the net income if you are in a single income home. If you are a two income home make two seperate income list. If you get paid hourly you might have to look at past paychecks usually about 4 – 6 to get an average of what you make a month. If you want to use only one income (in a two income household) to pay ALL expense to include RENT OR MORGATE then only use this income for the rest of the steps. If not then combine income now to know your total income you will be using for expenses.

3(b) Subtract your total income to your total expenses (YES THAT SIMPLE!) That amount left IS the amount that should be going towards your savings or investments. 

Most of the time we see that eating out, vacations, clothes, BASICALLY anything that you might splrug in is the cause of overspending and you can’t save the money you want to save. This is where you THE FINANCIAL MANAGER needs to decide what gets cut and what stays. Make sure that you dont cut something without considering your family members needs and wants. YOU WILL BE THE BAD GUY! So get used to it! If you can’t stand up to your family to keep them on the plan THEN YOUR NOT READY FOR MANAGING YOUR MONEY AND NEITHER IS YOUR HOUSEHOLD!

4. If you are in debt meaning you have credit cards that needs to be paid off or loans with high interest rate, PAY THOSE OFF FIRST! DO NOT I REPEAT DO NOT GO TO ANOTHER “LOWER INTEREST” CARD TO PAY OFF YOUR ORIGINAL CARD!! THIS WILL ONLY help you SHORT TERM not long term. Plus your CREDIT SCORE will get MORE DAMAGED then before!  Look at which credit card is your highest interest rate, the money from the lets call it “Profit” after the income and expenses and rent are done, use that amount to give more then just the minimum amount on your credit card. 

EXAMPLE: Your credit card balance is $4,000.00 Try to save money for rainy days…

With only giving minimum payments. This isn’t including the finance charge

4000.00 current balanace

59.00 min. payment

14%       Interest rate

560       charge for interest

4560.00 New OUTSTANDING BALANCE

77 payments to get a ZERO BALANCE

That means this will take you about 6 1/2 years to pay off!!

OUR PLAN:

4560.00 outstanding balance

100   THATS 41 OVER THE MINIMUM DUE

45      payments you will do 

YOU WILL PAY THIS OFF IN 4 1/2 YEARS!!

This is just an EXAMPLE with giving 41 dollars more then the minimum  payment! Imagine if you are able to give MORE from those “Profit” numbers we were discussing before. Remeber that when you pay off your credit cards or loans your credit scores will get better as you go!

If you your “profits” are slim CONSIDER ( DO IT!  ) getting rid of expenses that are not needed: 

    manicure, pedicure, cable, morning coffee, eating out, using the a/c or heater when not needed (open your sindows and a nice fan cools you off!!). Also if you go out try to go to places where you can make food at home and take with you! Enjoy your self at the beach, park, free admission meseum or check your local city for free festivals or events THEY HAVE THEM!!

Look at how often you truly watch cable? Most shows you can watch on the internet, Netflix, amazon prime, hulu and others subscriptions are WAY lower then regular cable. You say the kids…. Sorry but there are kids programs on the internet as well. Now instead of paying the $100+ BASIC cable a month, you will be paying $203 per YEAR which means  you are paying ONLY 16.91 A MONTH and you are still are watching your shows. 

Yes some shows you still have to purchase thru Amazon prime or other internet software devices, it still beats the $1200 per YEAR that you are paying for cable!

4. Once you have the budget and those list (thats your plan!) then it is time to set a schdule to sit down with your spouse or family (recommended to start off every 2 weeks) to review, discuss, and decide on the budget created. This is the time you both need to be hard on yourself and your spouse, remember always think of your goals and dreams first before your wants of now. Remember what I said above, you are the financial manager YOU ARE THE BAD GUY!

There were a lot of times when my husband wanted to buy something and I told him no. At first it was hard for him and for me but I kept reminding ourselves that we wanted to get out of debt and that these sacrifices were worth it.
If you have any questions of ANY KIND please let me know. There are more financial recommedations I can put on here to save money, how to search for bargains. Making your electriicity bill cost be less then $100!!

If you would like more of these post please comment below and I will do my best to put them on here.

Godd luck to everyone if you chose to use any or all of this!
Until Next Time,

LK