Thread: losing my mind
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Old 04-15-2015, 03:57 PM
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DavidBibby DavidBibby is offline
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Join Date: Jun 2010
Location: Palm Bay, FL
Posts: 415
Default Re: losing my mind

Hi Varoz,

I tried created the PDF file and it just looked like crap... so I'm going to write your plan out here.

Your Debt Payoff order is:
1.MasterCard - $200
2.Friend - $0 (until MC is paid off)
3.Bank Loan - $540.46
4.Mortgage - $1000.00
Total - $1740.46

Your net income is $4500 so your debt payments of ($1740.46) take up 39% of your take home pay. Which means that 61% or ($2759.54) is the money you are living off of for food, gas, utilities, services, fun, entertainment, savings, etc.

While I don't know the make up of the rest of your expenses... I believe with some small changes you might be able to put another 5% towards your debt. This is called a "debt payoff primer". I want you to see how powerful this is.

Right now you've committed to making $200 payments towards your Mastercard. The balance is $3816 and the interest rate is 20.5%. It will take 23.29 months to pay off the MasterCard with payments of $200. That's two years before you can even begin to start paying your friend back. If you then start paying your friend back the $200... it will take another 24.76 months to pay your friend back. That's another 2 years.

I propose adding a 5% debt payoff primer to payments. That 5% of your net income so the calculation goes like this:

$4500 (net income) x .05 = $225

This is money you ADD to what you've already committed.

Let's suppose you made some changes and you are able to come up with the 5%. This is what the numbers look like now.

Mastercard $3816 will take 9.86 months to pay off with a $425 payment (that's your $200+$225 debt payoff primer)

Just think.. 10 months from now you can start paying your friend back, because the MasterCard is GONE!

When you begin paying your friend back.. you pay him the $425 each month (what you WERE paying the mastercard before.)

You'll pay off his loan in 11 months. I'm sure he'd like that very much, and so would you!

Then you keep it going down the line until your bank loan and your house is paid off.

So the next question is... where will you get the $225 from to add to the $200 you're already paying?

Like I said before, we're looking to make small changes that won't change your lifestyle much.

Let's start with SERVICES - Here's some common services that add up quick when they are all stacked up together.
Premium Cable Channels
Amazon Instant Video and other monthly subscriptions
Lawn Services
Pest Control
Pool Cleaning
Laundry Service
Maid Service
High Speed Internet Service
Home Phone Service

How much is going out each month to pay for services like these? Some of these COULD be eliminated... but others could be reduced. Maybe the you can downgrade to a lower package and still enjoy the services. Instead of the ULTIMATE cable packages..downgrade to the GOOD cable package. These are just examples... I don't know what you currently subscribing too.

The best thing about services is that IF you reduce them... you only have to make a phone call once, and you save money from the start from then on.

Let's look at another area: INSURANCES
Are you paying too much for any of these?
Auto Insurance - You can reduce your auto insurance by opting to have a higher deductible. Going from a deductible of $250 to $500 or $1000 will significantly reduce your premiums.
Health Insurance - your choices are rather limited by your employer. It may be possible to have a higher paycheck by going to a low-cost HSA plan. The premiums are much lower... but the deductible is much higher. If you are normally pretty healthy... this option might be a good choice.
Other insurances such as Cancer Insurance, Life Insurance, Accident Insurance... all these things add up.

Again.. reducing or eliminating these can affect your bottom line.

Cell Phones - I've got 5 lines with T-Mobile for $145 a month... all unlimited talk... all unlimited text. We don't pay for data plans because we have wi-fi at home. I personally have not found anything cheaper than this... but I don't know where you live or if options like this are available to you.

Utilities - If your electric, water, and heat are too high... do what you can to reduce them.. I wouldn't find too much savings here though.

And now we get to everyday spending:
How much do you spend doing the following:
Eating Lunch with Co-Workers
Eating out with your wife
Eating fast food
Going to the movie theater
Going to the grocery store
Going to Walmart (I know some people who never spend less than $250 at walmart EVER!)
Ordering Pizza
How much do you spend on soft drinks, beer, and bottled water?
Hair Salons
Spa days
Manicures and Pedicures
Buying DVD's, CD's and other media

I am confident that there are places you can reduce spending without changing your lifestyle. I for one USED to spend a lot on soda... I'd get a 20.oz diet coke 2-3 times a day and spend $1.79 each. Now I buy it all in 12-packs that I got on sale... I save over $100 a months just from change the METHOD in which I buy soda.

So... this is a question and a challenge... How can you get that 5%?

I'm here for you man... if you have questions, just ask.

Last edited by DavidBibby; 04-15-2015 at 04:06 PM.
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