Hello, I'm your host, Mr. Chuck, I retired accountant turn truck driver, I reduce my debt in a relatively short period of time, debt reduction to achieve financial freedom takes commitment, confidence determination. debt payoff calculator, found a payoff calculator that can be used to estimate the time needed to pay off debt using my plan. Remember the one time payment being made, and the month made is an estimate. So may not be an exact estimating the total months needed to be debt free. With that said, I guess I need to start out with what is my debt reduction plan, we need to start there. And I'll work towards talking about his debt payoff calculator, you can find it in my show notes, a link to this debt payoff calculator in my show notes. It's www.calculator.net/debt payoff calculator. So with all that said, the first thing you need is a debt reduction plan. So what is a debt reduction plan? Well, my debt reduction plan is a series of things that you do in no particular order, but they all need to be done. And number one thing is quit creating new debt, or quit using your credit cards and quit borrowing money. That's number one. So that which that means that you have to start paying for everything, cash, with the money that you have. So if you using credit cards to pay some of your monthly expenses, it could be tough to get off of that. Because if you've been using them to pay monthly expenses, and you don't pay the credit card off every month, and you gradually again, a higher and higher balance, you're working yourself toward some problems. So that's number one, quit using credit. Number two, make all the minimum payments on all your debt and make those minimum payments timely, though not pay anything extra at any time. Number three, if you don't have a savings account, or a an emergency fund, you need to get one started. And you need to build it up so that you have at least a minimum of $1,000 in there, then over time you can keep increasing that mount. Why do you need an emergency fund, it's for emergencies only in case something breaks down and you need to replace it or repair it. That way you can no not use credit. The larger your emergency fund, the better off you're gonna be. Because if it's too small, and you have a large expanse, he may use part of it to pay off whatever it is. And then you might have to use some credit. So now you're violating number one, quit using credit. So So start out with a minimum of $1,000. And you need to build it up to that amount. And then keep increasing that over time. Once you have, I'm gonna say$3,000 Just to make it simple money above your emergency fund limit that you set, say $1,000. So now you have $4,000 in your savings account. Why do you build that up so high, because as you're building that up, you're gonna get the 1000 and then maybe 12 115 102,000. As you build that up, your emergency fund is bigger and bigger and bigger. So if emergency would happen, you would have the money to maybe pay for most of it. And once you get up to $3,000 more than what you emergency fund a mountain limit is save 4000 And you have no big expenses coming up and you got everything under control. Then you use that $3,000 and you apply it to your debt. You want to pay off the highest interest rate first. But if you're just getting started, maybe you have a credit card with say a $2,000 balance on it. So you want to pay off the lowest debt first. So he can Feel like you accomplished something, because you already quit using debt, you're paying everything as you go on a timely basis, you increase your savings account your emergency fund, so you're being successful. So a little bit better feeling is to pay off a credit card, if you have one was a small enough balance, you can pay it off to zero or get close to zero, then do that one first, no matter what the interest rate is, then after that, you want to pay off the ones highest interest rate first, and then work your way down through it, you keep doing the same thing over and over and over. At first, it's gonna be a fairly slow process, it's gonna take us some time to adjust to paying cash for everything. When I say cash, I mean money out of your checking account. So that would be either cash eight withdrawal from your checking account that you use to pay for things or using your debit card. So it's important, you don't overdraw your checking account. And it's important, you keep track of all your spending. So that's why you need a check register. And nowadays, you can get an online account where you can manually input it, and I recommend you manually input it, because that's the cheapest way to go. Because remember, you're trying to save money. And by paying a higher fee for service, you're not saving any money. So do it yourself, manually do the inputs, that way you know where your money is going. And that's very important, in your over time will know where your money is going, when it's gonna be due, and about how much is due. So you get to know your spending habits. If you're buying things that you don't really need, you should start to reduce that spending. So right now, if you got a debt problem, we need to focus on paying your needs first, which would be housing, transportation, food, and some clothing and keep the clothing as low as possible. And food, you want to try to reduce the amount of times you eat out, I'm not saying quit going out to eat, that tried to do some cooking at home most of the time, and then reward yourself with going out to dinner with your spouse or whoever, every once in a while, say once a month, after you have achieved some of your goals. Now, once you got your spending tracking under control, and you're using an online service, I use counts about.com It's all one word. It's about $10, it's a little bit less than $10 a year, and I manually do my inputs. You can link it to your bank account. But don't do that. You can have multiple checking accounts, multiple savings accounts and multiple credit cards in there, you don't have to download it to a computer, you just go to their website and log in your comes up and I've never had any problems with it. Once you do that, they have categories and the categories are preset up, he just got to be consistent. When you enter your spending your expenses, your items into there, that you put it in the same category. And you're consistently do that month in and month out. Now once you got it set up, say the first 30 days, you can set them as a recurring transaction. And when they become due, they'll pop up. So now one thing to do is maybe change the dollar amount change the date might be a day, you know, because of the weekend, the date might change a day or two, the dollar amount might change a few bucks. And then you hit enter and you're done. It's quick and easy. That's the reoccurring transactions. And once you get that done for 30 days, you just do yourself a report by category from the beginning of the month to the end of the month, 30 days. So I'm talking about beginning month end of any month. And you print out or lease on the screen a report by category. And you can use those numbers to create yourself a budget in a spreadsheet. And you can now just copy that into a spreadsheet and you have three columns to make your bot budget. You can just copy this scription over in column A, and Column B is the dollar amount, you could call that budget, Column C is actual and Column D is the difference between the two, a minus b, if it's negative, that means you went over if it's positive means you're staying under what you spent the previous month. Now you have yourself a budget, include your income in there, you include all your spending, and at the bottom of it's the difference. Plus, minus equals simple. If that's a positive number at the begin at the end of the month, and you spent less than what you earn, you're doing good. That is the dollar amount you would use to transfer into your emergency fund. So let's say you do that, the first month, you have you want over you actually spent more than what you earn. So you start working on things, you start taking things out, you quit, you start canceling items you no longer use or need, and then you just gradually reduce it down. So now you have a positive number at the end of the month at the bottom, you know, income and expenses out, plus or minus at the bottom, FSA plus mean he had money left over that, that's your amount of money that you can transfer into a savings account. And then remember your checking account, you should maintain a minimum balance, I say $300, I personally use $600. So like my checking account never goes below $600, you can start out may make that $100, and then gradually increase it. But then Anything over that you can transfer in to your checking account or your savings account. So let's say you do the budget, you have a positive number at the bottom of $250, you keep a minimum 100 And your checking account. So now it's $150 you put into your savings account, how long that's a month. So how long is it going to take you to build one, your emergency fund first up to 1000, and then have at least another 2500 to $3,000. In excess of that, you just figure out the math, you just do 3000 divided by the amount of money, you're putting in your your savings, your savings on a monthly basis. And now give you an idea how long it's going to take you to build up to the amount of money where you can now apply it to your debt. Let's say that turns out to be roughly five months. So every five months, you're going to be able to apply money to your debt and how that is gonna get shorter in time as you go. As your debt starts to decrease. That saves account Oh increased a little bit faster. And the less debt you have, the faster they'll start growing, the more you keep your spending under control, the faster that's gonna start growing. And it will speed up over time. So by using this debt payoff calculator, at the beginning, do it try to be pretty accurate on it. I'm not sure. Oh, you can put more in okay. I'm not sure how many debt or credit cards you can list on it. But it says Show more input fields there I'm looking at it. So you can add as many as you want. Maybe you should just start out with if you have multiple credit cards with that. Just put in all your credit cards, focus on getting your credit cards paid off first, because they have the highest rate of interest after your credit cards and then focus on auto loans or a line of credit on your home. So that's how you get to determining or s making an estimate on how often and how much you'd be able to apply extra money to your debt. But the whole other time. Every other month, you're just making the minimum payment. And you're paying cash for everything or using your debit card to pay for things. And you're eliminating spending as much as possible. Because you have a debt problem. So you got to cut spending out of your life. Maybe that's what got you in prom, maybe you went shopping too often. Maybe you took too many vacations and you never got them paid off and then you took another vacation and it just keep building and building and now you're in trouble. And maybe you took out a line of credit against your home to pay off some crap have cars, and then you charge the credit cards back up. Whatever you did, it doesn't matter. Now, the focus is getting rid of that debt. And this is how you do it. So now let's talk about this debt payoff calculator, it's gonna calculate it, you go in, and you put in the debt name, like credit card, or the name or the bank of the credit card, remaining balance how much you still owe on it, the monthly payment, the minimum payment is what you're asking for. So the best way to do this is have all your credit card statements in front of you, or be able to log in online and find all this information. So what is the minimum monthly payment, now that's going to change over time as you pay down the credit card, but whatever you start at least that minimum payment the same. So when you set that up, the myth that credit card minimum payment is $60 a month, if you get it paid down to $100, but then he can't really pay it off. Don't you know, your minimum payment might be 20 bucks, just leave it at 60. Because it's going to be paid off soon. And you need to know the rate of interest rate. So you need to know the name, balance, do the minimum payment and the rate of interest that they are charging you. And you put that into this calculator, it doesn't matter what order you put it in, it's the calculator is gonna calculate this, based on using the Avalanche Method, which means it's gonna pay off the highest rate of interest first, and then work its way down to the lowest rate of interest. So in the example, when you log in, it's got number three is credit card one has a $2,000 balance$50 minimum, almost 19% rate of interest is going to pay that one off first. And then it's going to pay off credit card number two second, then it's going to pay off the auto loan third, and then the home mortgage fourth. And that's because of it's based on the interest rate. And by chance, credit card three has the lowest balance. So it's really paying off the lowest balance one first and then paying off the highest interest rate, they have extra payments $100 per month, make that zero extra payments blank per year, leave that 01 time pain made during the blank month, fifth month. So let's say that you go in, and we know that we want to apply a roughly$3,000 you build up your savings to 4000. So you put in extra payment $3,000, one time may during the blank month, how long is going to take you to get that much money as it can be three months is going to be eight months, whatever it is, put that in there. So you change the dollar amount and you change the month. So every eight month or every fifth month that should apply for you. I think that's how it works. Okay, it's not working like I thought it was, but this is how you can use it. Put in all your credit cards, figure out a one time payment of say $3,000. And it's gonna take you six months to build up that money in your savings account. So you put zero extra payment per month and zero per year. And he put in 3001 time payment may during this six month. He say yes, you because you want to apply the fixed amount towards monthly payments, and then you hit Calculate. And it'll give you from that present moment to six months ahead and then beyond. But what you do is since it's only a one time payment, what you have to do is look at their what what they say you're gonna have to do says Pay$50 until the fourth month and then paying $1,955.30 at the fifth month to pay off. And then the credit card number two is pay $60 to a fourth month and then a tire how much to apply until the fifth month and then pay X until x month and then you know like to keep giving you the payments to make to the time it's paid off. So what you do is you do this you write it down, maybe copy it or print it off and then you reset The calculator, you take out the credit card you got paid off, after six months or five months, whatever it is, and you put in the outstanding balance of everything remaining at that point in time in the future, then you put in a $3,000, and you're gonna maybe get to apply it in the fifth month, calculate it again, and it's going to tell you what to do, is saying here that you've been paid off and loving years and 10 months, but that's including a mortgage. So if you just do credit cards, you know, just update it and put all your unpaid credit or your credit card CEO on, just put those in the extra payment, one time payment, How long is gonna take you to get there, boom, and they'll give you an idea of how long it's gonna take to get you all your credit cards paid down, at least the first one, and then the next one. And then the next one. Maybe when you apply that$3,000, you might pay off to two and a half of your credit cards, and then putting in re enter it using the remaining remaining balance, the minimum payment, and the interest rates will be the same. So you just gotta take out the credit cards that got a zero balance when that happens. And leave in the credit cards that still have a balance due and make sure everything matches. Apply your one time payment, How long is gonna take you to get there. And this will give you an idea how long it's going to take you to get your one if you just do and credit cards, how to get your credit cards under control and pay down to zero. And then after that you can put in your auto loans and see how long it's gonna take to get rid of your auto loans by using my particular method, remember, the most important part is quit using credit, and build up that emergency fund and build it up past what the emergency fund would be. Don't make any extra monthly payments, because that's this nickel and dime, you're not going to save a whole lot of money, you're not going to make any progress. And then if you keep doing that he won't have any cash available, something would pop up or have an expense goes up, say your natural gas or heating your home goes up $20 a month. Well, if you used all your money up trying to pay off a credit card by paying an extra $200 a month, he may not have the money available. So you want to keep it in your savings account so that you don't have to use credit in the future to pay for your needs. I'll be back in one moment was my final thoughts. If you want to contact me to request my spreadsheet for the budget, or leave a comment or ask a question, you can send it using my email, reduce debt, increase well@gmail.com. reduce debt increase wealth is all together no spaces. If you'd like to ask a question, quick question in the subject. If you'd like to request my monthly budget, put budget spreadsheet in the subject matter if you want to leave a response of any kind is put a comment in the subject manner. I will get back to you as soon as possible. I know that this debt payoff calculator is not perfect. But it's probably the best thing I seen to use so far. It's important. I know it's going to be a slow process when you first get started. I paid off 100. And I think it was$133,000 in three years and eight months, and I only make about 50 to $60,000 a year. So it's not like I made a whole bunch of money and then quit make a bunch of money. No, I did work that keep my spending under control. Watch what I spending everything that I was paying for every year or every six months, I would look for ways to reduce the price because everything keeps going up. So like cell phone bills, internet bills, all those type of things. I look for ways to keep the cost down. And one big expense is cable TV. If you're still paying for cable TV, we need to do away with it and start streaming all your TV. And when you're streaming you get to keep it to two services. What I used to do is have one service a for three or four months and then I would cancel it and I would go service B for three or four months and I would go back and forth for streaming services or month to month, you're not locked in for long term. So if you got cable TV, and you're still paying well over $100 for it, as soon as your contract is up, and you can get out of it, get out of it and look for streaming services, where you can watch the same thing. And maybe only be paying$60 A month or even less. I did that because I was paying for my internet service. And I wasn't using I mean, I'd go online, do some searches a little bit on the internet, I thought I'm not using my internet service to the maximum for what I'm paying for. So let's do some streaming. And I did it a little at a time. Yes, it was sometimes it was slow. Sometimes it was lag and all that buffer and whatever they call it. But I eventually got it sped up enough, or I don't have those problems no more. And I got a good deal on it. So I'm not paying for that cable TV. And I got two or three services that I stream one for the wife, because she's from China, and she wants her China TV. So that's one and then I have a couple for myself. So I'm not spending a whole lot of money on walked in, I got it cheap. And I've been with them for two or three years, and I'm locked in at a low price. Now, they raise the prices, but I'm grandfathered in for some unknown reason. So I'm saving money. And that's a big area. And same thing with cell phone service should be have unlimited talk, text and data. That's the standard. Now, if you don't have unlimited, all three of those, you're paying too much, then they're screwing you out of some money. So look around, look for a different services. If you're not paying for a phone, and you get the phone paid off, for example, unlock the phone, and then you can go to any service. And then don't ever buy a phone through a service again, because they lock you in for a couple years while you're paying for it. And then that price goes, I may end up paying more than you should be. That's my opinion that by using his calculator, and keeping your quit using debt, make the minimum payment, build up your savings emergency fund. And then when you have extra in there, you apply it to you on a two year debt do maybe the first time it would be the one with the lowest balance to get it paid off. So you have some success, and then apply it to your highest interest rate first and then on down the line. So in order to do that, you'll need to have all your credit card statements handy. Everything Oh, because you need to know who you owe, how much you owe the minimum payment and the rate of interest. And I always throw in there the date that you owe it, when's it do? What day do you have to pay it? Because it comes in to your planning. If you have it do on the day where you're like between pay periods, and it's towards the end of a paper, you got to make sure you don't spend too much money before that bill is due. Because you got to pay it and you got to pay your bills timely. The least the minimum amount on a timely basis. And this all these things will help your credit score over time. And you'll get your debt under control. So no matter why what you're doing, why you wouldn't get your debt under control or pay down whatever the reason is, maybe it's student loan debt, you do the same thing. And maybe it's not credit cards, maybe you got a whole bunch of student loans and a couple car payments. Maybe you got a line of credit on your home. That's the interest rates starting to go up. Now because interest rates are going up and it's a variable rate. So you maybe want to get your line of credit on our control. Whatever it is he do it exactly the same way is all the same. So until next time, keep your stuff under control, stay focus. track your spending, do a budget, pay cash for everything, pay the minimum on all the thing, increase your emergency fund, and you'll be glad you did so