Charles McDonald: 0:04

Hello, I'm your host, Mr. Chuck, I retired accountant turned truck driver, I reduce my debt in a relatively short period of time, debt reduction, to achieve financial freedom takes commitment, confidence determination. debt reduction plan, getting debt under control a plan is needed. debt reduction plan must do more than just reduce debt to be successful. And more about the happy giraffe.org. That spreadsheet to work with every plan, I have a link in my show notes to the happy draft.org For slash live, where you can download two good spreadsheets. One of them is the debt spreadsheet, which we put in all the debt you're trying to pay off. For example, if you're trying to pay off your credit cards, he just put in your credit cards, all the information, the name, the amount you owe the interest rate, maybe even a due date. And then it will do a give you a summary. Bow how long it's going to take you to pay it off, you also put in the minimum payment. And then you put in how much extra you can pay. But if you're following my plan, you put in zero there. But we can still make this work by when you go to the tracking part of that spreadsheet, you put in how much you actually pay. And you keep a running balance, you update the balance, and also gives you if you're ahead of schedule behind the schedule, how you're doing all that kind of stuff. But it's a great spreadsheet. If you can get all your information together and be in one place. In this at a glance, you'll know what your unpaid balances are on all your credit cards, for example, and you can just keep things under control. I also have a link in my show notes as to ferry last one. For those of you who may be interested in the software, I personally use to get out of debt, I couldn't get it to work as far as just clicking on it and pulling up the link to the website, you have to copy and paste the link to your browser to find the site. And in the upper left hand corner it should read Mei LAN and Chuck, I'm Chuck Milan is my wife so that you know you're in the right place. So what is a debt reduction plan? A debt reduction plan is a plan that you put together for you to follow to help you get your debt under control. And it gives you guidelines on how you're going to achieve that process. So if you're overwhelmed with debt, I have no idea how you're gonna do it. Or maybe you've been making extra payment on all four or five of your credit cards, you've been paying $50 $75 extra a month, on every one of your credit cards, you're always broke, you're living paycheck to paycheck, he can ever seem to get ahead, he start getting one unpaid down, maybe a couple of them getting close to being paid off, and something happens. And you have to use them again. So you never really get them paid off. If that sounds familiar, you're never gone to achieve your goal of getting your debt paid off, or at least your credit cards. And then eventually your car loans, personal loans mortgages. I was motivated to get it done. So I really cut back on all my spending in every area I possibly could. Now there's some things you can't price of gasoline keeps going up. And you need that to go back and forth to work. You need to eat food, you got to pay your utilities, you got to make your mortgage payment or your rent payment. So there are things that you always have to pay on an ongoing basis that maybe you can't reduce. And maybe you have trouble or maybe you're in an industry where you can't maybe change jobs to make more money. That's what I did. I changed jobs got a big increase in pay, which really helped my cause. So here is my debt reduction plan. To end the order, you need to do thanks. And the first thing you have to do is quit using credit. Quit using your credit cards, quit borrowing money, quit getting payday loans, quit going to the pawn shop and pawning something, he quit doing that, no longer use your credit note, you got to stop using credit. And you're thinking, Well, how's that gonna help me pay off my debt. But if you're not increasing your debt every month, is a lot easier to get it reduced. And the only thing that you're paying is the interest, but you're gonna pay the interest every month. That's why it's so hard to get everything paid off. Because even though you're paying extra, most of your payment is going to interest and fairy Ludo of it's reducing your principal. So that's the first thing to do, he got to stop increasing the principal amount. The second thing you have to do is start making the minimum payments on all your debts and all your loans don't pay any more than the minimum required. And there's a reason for that you're struggling to pay your bills, you're struggling you live in paycheck to paycheck, and part of that reason is all your cash is going to these extra payments, or while you're trying to pay down something then you're struggling in other areas. Let's quit doing that. Number three, if you don't have an emergency fund, you need to set one up. An emergency fund is nothing but a savings account. If you don't have any, go to the bank or you have your checking account, tell him you want to set up a savings account and open it up, put the minimum in and the minimum might be$25 $50. Whatever the bet your particular bank requires. And why are you going to do that? Well, because if we build up an emergency fund, and have a minimum of $1,000, when that unexpected expense comes along, you don't have to use credit. Or you can use a lot less credit, your car could break down, you might need new tires, a battery appliance in your home could break, a child could have an accident need medical attention, you could lose to get sick, not go to work, probably get laid off. There's all kinds of reasons why you need an emergency fund. So let's get started and get it up to a minimum of $1,000. Now the hardest part of all this plan is the first one, stop using credit, especially if you've been using your credit cards to pay your monthly bills. So if you're doing that, and you're making extra payments on your credit cards, why are you doing that you just increasing the principal, every month you're getting farther behind your interest keeps going up, and you never got to get out from under it. That's why you don't do that. So that's step one, quit using credit, make the minimum payments, that's going to happen the same month soon as you start this plan that's gonna happen on the very next payment you make on any of your debt, the minimum amount, and then anything you have, that you've been applying to that external debt, or maybe using credit instead, you know, put at least $50 To get started, get that savings account set up. Because we want to start putting$10 A pay in there or $20 a pay. So slowly build it up while you're getting the rest of your finances under control. This part of the process might take 30 to 90 days. Maybe it won't take us long, maybe it could take longer. But while we're doing this, we're slowly building our emergency fund. We're paying cash. Cash, I mean is paying money directly from your checking account. You're paying all your your your monthly expenses on time. You're paying all your loans on time. You're paying all your utilities, you're buying and paying for gasoline, groceries, whatever else you may have. You're paying for it without borrowing money and you're making timely payments. And while you're doing it any little bit extra cash you have is going into us the MSA count. That's the main part of the plan. But you're thinking to yourself when I'm going to pay down debt, well, that's a good thing to think. Because eventually you will, once you build up your emergency fund to a minimum of$1,000, you keep building it up until you have three to $4,000. Once you have the three, the$4,000 range, in your savings account, all your monthly bills are paid, or at least you have the money to pay them in your checking account. And they're not currently due. But you have everything under control, you your timely and all your payments, you got your credit cards, all your loans are being paid your utilities, everything's caught up, you got a positive balance in your checking account, you got three to 4000 range in your savings account, everything's looking good pay day is tomorrow, or maybe it may be at the end of the week, and we're looking at Tuesday, and at the end of the week, you get another paycheck, and you're gonna have everything paid for without that check, you don't pretty good. So at this point, now, you don't have to have meet all those parameters. But mostly everything somewhat paid up to date, or be able to pay up to date without using your savings and have the three to 4000 of rent range between three to 4000, you take the access over the your minimum of$1,000. So let's say you have 3000, your minimum is 1000, you have $2,000, you apply it to one of your debt, if we're trying to pay off your credit cards, you're gonna pay off one of those credit cards, or you're gonna pay down one of those credit cards. Now, the very first time you do this, it's your choice. You can pay if you have a credit card with a balance of 2000 or less, or the$2,000 or bring it to zero, pay that one first. If you don't have any of those, then pay the one with the highest rate of interest, and may be the largest balance that if you have a credit card, let's say one with a $3,500 balance, we're gonna apply 2000, let's apply it to that $3,500 One, so that it's now 1500. The next time you have the money, you pay off that one, or you can still be making minimum payments, so it's gonna be creeping down a little bit. But then the next time you go to do it, if it's not already paid off, you pay off that one. And then from now on, after you get that first one paid off, you don't use that credit card, you do not cancel that credit card, take it out of your wallet, put it in someplace safe. And don't forget you have it because someday, the next year, so he might be able to use it to your advantage. Now we're going to concentrate the next time on applying it to the highest rate of interest first. And then you got to keep doing this over and over and over. Now as you go when the first one you get paid off, your minimum payment is going to go away. So that's going to give you a little bit more to put in your savings. So your savings will grow a little bit faster than when you get the second one paid off, the same things gonna happen, your minimum payments gonna go away, your savings gonna grow a little bit faster. And as you go, you're gonna pick up speed over time as you get less and less debt. The last minimum payments you have, the more you have the put in savings. And the more you have in savings, the faster it's gone to grow, the sooner you'll be able to apply a chunk of money to another debt. It's a fairly easy concept. But it's hard for a lot of people to do because they cannot stop using credit. So that's a problem. Maybe they have trouble paying their monthly bills because they have too many. Maybe their income is not high enough to even cover monthly bills. So they were using credit cards to cover the difference. So you need to get rid of thanks. If you're paying cable TV over 100 and anything over 100 bucks on cable TV, you're paying too much. You got to get rid of cable TV and pick one or two streaming plan. forms and stream. Because if you're paying for Internet service, and you're not using streaming, you're not getting the full benefit of that payment for your internet. That's the way I looked at it. So maximize my internet service that I was paying for no matter what I cut out cable, I got two channels that I stream, and I'm good to go and I'm save I saved a bundle of money. Another way to save money is to once a year review your plans and call your provider and see what they have available for the same service. Maybe they got a another plan at a lower price, because they're always trying to attract new customers and tell them, if you don't get a price reduction, if he can't do anything to save you money, you're gonna go somewhere else, because there's three other providers out there that can give me the same service for less money. And maybe they'll work a deal with you to keep you as a customer, the only thing you can do is try or cancel it and move on, don't be loyal to any one service, because the longer you're there, the more they're going to charge you and the less loyal they are toward you, they're gonna take advantage of you for not continuing, updating and keeping track of the pricing stuff. Because they'll leave you locked in at higher price, they have no problem doing that. So we need to, you know, look at where your money is going, you got to be tracking everything, the money coming in and everything going out, you need to have a control center. And then with those two, you have a debt reduction plan, you set yourself some goals, I want to pay off all my credit cards. That's goal number one. Now how do I do it? Well, I need a plan. Here's my debt reduction plan, I quit using credit, I make the minimum payment, I start an emergency fund, build it up to a minimum, and then I apply big chunks of money when I have the money in my savings account, the longer it's in your savings account, the bigger the emergency fund. So as something would happen, you have more in your savings emergency fund, you can cover a bigger disaster without using credit, fairly easy thing to think about. I'm gonna happy draft that or has two spreadsheets, the debt reduction, they have a debt spreadsheet where you list all your debt that you're trying to pay off. And then you have a tracking area where you put in your monthly payment how much you paid for the month, you put in the running balance. Now you get this information either online from your account, or from the paper bill that you get or have that remember that your updated balance is always gonna be one month behind. Because you may have made a payment recently. And it's not updated yet because your statement is from the last period. So keep that in mind. He can go online, maybe get a better, more current up to date balance, and then he can see what's going on, you can see all your for every one of your credit cards, you can see all your minimum payments. And you can see where he applied a big chunk of money. So you know, it tells you the balance at the top, it gives you a rate of interest the name, so you can make informed decisions on how you want to pay down your debt. If you want to use the Avalanche method that's paying the highest interest rate first, to pay in the lowest interest rate last to the snowball method where you pay the lowest bounce first to the highest bounce. I do a mix of that I always start paying the lowest balance off first because that brings a credit card to zero. And the reason I want a credit card was a zero balance is because maybe three months six months down the road into the future. They may offer you a zero rate interest on any other debt that you transfer to their card. So if you have a credit card that has a interest rate of 20% 17% 15% and you can pay 3% or 5% to transfer it onto the zero card and then have 12 months or 18 months to pay it off. Interest Free Be, you're gonna save a chunk of money, and you're going to pay down your debt a little bit faster, that's what I did, they're gonna offer you these incentives to put money on there and use it to your advantage. If you can transfer a mound of money onto there, that's going to be interest free, or you can pay$50 a month, $75 a month on it, and get it paid off and under the terms of the card. So you have a zero balance before that date comes, you know, do, you're gonna save a chunk of money, and you're gonna take that high interest rate card, and you're gonna lower the balance significantly, to 3000, like making a big payment, you're gonna pay a little bit less interest, which means you're gonna apply more to principal, so it'd be paid off faster. That's why you never close your credit card, you use them to your advantage. And also, if you close it out, you reduce your amount of available credit, that hurts your credit score. So we're, if you've been struggling with debt, and your credit score is probably not that great. You don't want to close any of these cards you pay off, because that will kill your credit score because your income, the credit ratio will change. So if you have a lot of credit cards was zero bounce, like three or four was a zero balance, you got a lot of income, you got a lot of available credit, they love that you get a higher credit rating. Once again, if you're interested in the software, I talk about coming up that I personally use to pay off my debt, I have a link in my show notes, the very last one, you most likely have to copy and paste it in order to get it to work. I couldn't figure out how to get it to work by just clicking on it. If it works, when you click on it, and you great if not, you need to copy and paste it. And upper left hand corner should say mainland and Chuck. I'm Chuck. My wife's may land.

Unknown: 22:16

That's our website. Look it over. And

Charles McDonald: 22:19

if you need to contact me, there's a contact information in there. Send me a note, if you're not interested, fine. I'll be back in one moment with my final thoughts. If you're interested in learning about an online software that helped myself get out of debt, it does tracking, budgeting, and keeps track of all your assets and all your debt. And even tells you how much and when to transfer money into your savings account. And how much and when to transfer money to your debt and which debts to pay off in order. First. It's not cheap. It's a one time payment. But it will definitely be an investment, something and yourself and an investment in your personal financial life. If you're interested, send me an email at reduce debt increase wealth@gmail.com. And I'll send you the information about this online software that worked great for me. If you're struggling to live and you're living from paycheck to paycheck, you probably have two problems. You have too much debt, which is forcing you to make those debt payments, which is leaving you're short on other things that you need to do to survive, to live, like buying groceries, gas in the car. Whatever the case, paying your utilities, you need to get your debt under control. And you do that by having a tracking app. He track everything that you're doing and your finances. You have a control center, which is nothing but a budget. I call it a control center. And if you listen to my episodes, it's not that difficult. You can go to happy draft and use their first spreadsheet in that web page. If you've been tracking in you know your numbers, and you can put in good information. It will tell you how much you have available to spend every week. What you how much money you have, then you use that money to pay for your groceries and pay for your gasoline and whatever else that you're paying for it. Just be careful. You don't go over that dollar amount. If you stay under that dollar amount, you'll save a little bit you can throw that savings into a say payments that count, and you can stay on track, you can use the debt Sheet worksheet they have to get all the debt you're trying to get under control, I would start with just first doing credit cards only, then once they're all paid off car loans, if you have personal loans, you can maybe do car loans and personal loans, then finally, you can work on your line of credit, or your first mortgage or whatever your mortgage situation would be, it's helpful, and you'll be right there, all the information that you need is in front of you, you can see it, you can make an informed decision, you know what you're doing, this makes this process much easier. So once again, debt reduction plan, your goal was to get out of debt. This is generally say a broad statement, I want to pay off debt, I want to name more debt, talk, credit cards, car payments, everything. That's my goal, how am I gonna do it? Well not start making, I'm going to quit using credit, I'm going to make the minimum payment, I'm going to build up my emergency fund to at least $1,000. And eventually, over time as my debt shrinks on the money increases, I get my credit cards paid off, I increase my emergency fund to$1,500, I get my car loans paid off, I increase my emergency fund to $2,000, I get a line of credit paid off, which is a equity line of credit on my home, I increase it to $3,000. Because now everything I got is a mortgage which I can pay easily every month play increase my emergency fund or my savings to a point where I have a minimum of three months worth of expenses. If something would happen, and I can't go to work or if I lose my job, whatever the case, then I can get by for at least a minimum of three months before we need to panic may give me time to recover. If I had an accident, maybe it'd be time to find a new job. Whatever the case, may be, you don't have to make rash decisions in the hurry. You can take it and make informed decisions over time, because you have the finances to do it. That's the purpose of an emergency fund. Don't get too bogged down in that slowly bring it up. If you want to increase it by 50 bucks. After you pay off your first credit card and then another $50 that you pay off, you can do it like that and gradually increase it. So you just have a little bit more a little bit more and a little bit more. That whatever you do, write it down, you need a plan, quit using credit, make the minimum payment, have an emergency fund, set yourself up a minimum, keep building up that emergency fund until you have access of your minimum, apply the excess to one of your debts, however you choose to do it, continue doing everything and repeat the last part over and over. Over time, it will get faster your savings your emergency fund will grow faster, you'll start paying down more debt and one chunk, your debt will start disappearing faster. And it just speeds up up and up because you got the same income. Hopefully you'll get a pay raise in there and I'll speed it up a little bit also. But you got to stay focused and you got to continuing doing all those steps the whole time. Remember the emergency fund is for emergency only not to pay your monthly bills as far as something unforeseen that happens that you need money so you don't have to use credit. You'll be glad it did. So