Saturday, February 14, 2009

Journey to Become Debt Free

I have always liked to read-newspapers, magazines, books-mostly nonfiction. Generally , I read nonfiction books- biographies, self help, real estate,business(how to make money & how some run and market), entrepreneurial, and personal finance books, among others. I have read hundreds if not thousands of books. To go way back , I won a trophy in third grade for reading so many books--which I still have today. I have read to learn and to better my situation in life.
In reading personal finance books,I had read many times about the debt snowball -executed many different ways to become debt free. I had always written my bills down in a calender form to tell me when each bill was due. Also I would take each paper copy of the bill and stack them in order -by due date-when I paid one I would take that bill off the top and place it somewhere else to indicate that it was paid. This is a system I still use today- I have prided myself on paying my bills on time--although I have experienced a car repo when I was in college and let credit cards go around 1995.After this time, I have also written the bills/ debts I owed down -with the exact amount owed. I have paid down my debts many times, only to have let them creep up to the the present large amount. Among many authors that preached paying your debt down, Dave Ramsey sticks out to me. I decided to give his way a try. I decided in January of 2007 to start writing all of my debts down with detailed info such as the bill issuer, the amount due each month, total left on the debt, the annual percentage rate associated with it, and the months it would take to pay off the debt if you just payed the minimum each time. I started with with $42,000 worth of debt and I now stand at $32,418.93.I have made progress but obviously not enough. I really had a terrible year last year as far as jobs and making money. They say you need to be debt free to truly be able to generate wealth--my ultimate goal. At any rate, I am still committed to becoming debt free. This is one of the main reasons I have started this blog. The debt snowball Dave recommends involves writing your debts down the way I described above and attack them with "gazelle" intensity. He says-although many disagree- to start with smallest debt and pay as much as you can towards it-making sure to pay the minimum due on the other bills.Pay off the smallest one and apply the extra money(that you would be putting toward the 1st bill) towards the next larger debt). He says that this will allow you to build momentum. I personally like this method the best. I am in a situation now since starting that I have paid off my car and do not have any rent or house payment. I am almost a little afraid to admit to all of the credit card debt that my girlfriend and I have. This debt has held us back along with my lack of income at times. I really want to turn things around by becoming debt free and finding a good job. Here is a list of my current debts that I would love to pay off within the next one to two years.

1. Student Loan $52.87 month $3875.77 owed 5.375%

2. Bank of America $162 month $5737.55 owed 19.73%
3.Bank of America $78 mth $3427.03 owed 15.74%
4.Bank of America $35 mth $1270.58 owed 20.92%

5.Chase $263 mth $8062.40 owed 27.24%
6.Orchard Bank $44 mth $1127.94 owed 29.49%
7.AT & T $55.66mth $2081.84 owed 19.99%
8.Capital One $29 mth $1422.26 owed 12.4%
9.Target Card $24.43mth $858.99 owed 20.99%
10. Citi Card $59.99mth $2138.64 owed 19.99%
11.Lowes $15.00mth $714.41 owed 21.99%
12. Sears $10.00mth $417.23 owed 23.99%
13.Wamu $31 mth $860.33 owed 28.20%
14.Capital One $15 mth $486.36 owed 15.90%

total- $874.95mth ttl- 32,418.93 owed

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