Debt

Debt has been in the news a lot with the financial crisis our country finds itself in today. Credit, loans, mortgages, and so forth. It seems to me that our society (and subsequently, the American dream) is built upon the idea of getting what you want right now even if you don’t have the money for it.

I was raised by a financially smart father who taught that the only things worthy of going into debt for are a home and an education. By his example he showed me that in some cases it may be necessary to go into debt for other worthy family related causes such as health care and a safe (but economic) vehicle. This is what I learned from my father, and it is the way I have tried to handle my own economic decisions.

The phrase my father would use is “living within your means.” If you do not have the means to obtain something, then you can’t get it. Debt should be used wisely to secure your family’s future. Too many people these days are actually digging holes and setting traps for their family to deal with in the future. It’s all about getting what they want now. Not many people give much thought to getting out of debt, and even fewer people give any thought to staying out of debt in the first place.

When I met my wife I was going to an expensive college, and we still have a lot of debt left over from the two student loans I took out while going to school. We also have a little debt left over from some medical care my insurance wouldn’t pay for while I was working at the bank, and some debt left over from a few important repairs we needed for our family car.

Soon we will be receiving a little extra pay for a few months so we are coming up with a plan to make the most of this additional debt-smashing cash. There are many methods out there for paying debt down as fast as possible, and I looked around until I found something that looked good. I found a free debt reduction spreadsheet that offers flexibility and ease.

Obviously, I will be calling the main creditors to see if I can negotiate with them, but in the end we will fill in all of our debts, the remaining balances and interest rates, and the sheet will let us try several payment plans to see which plan gets the job done the fastest.

The main idea is to “snowball” the payments. You look at your budget, take what you have available that isn’t going toward regular payments, and focus it on one debt until that debt is gone. Then you can take all of that payment and apply it toward the next debt until that one is gone. The spreadsheet helps design a plan that will be fast and effective, providing a payment schedule and even telling you when all of the debt will be paid off.

Sometime today we hope to get most of the data entered, but I’ll have to call the creditors next week. Hopefully though, by the end of the weekend (at least) we should know how long it would take to pay off all of our debt with our current interest rates.

I can hardly wait to get all of that nasty debt paid off. Freedom from debt feels great, and it will free up a lot of money we keep pouring into credit cards and interest. Once it’s all paid off, we may not live like kings, but we will not have to worry quite so much about fixing the car, or even looking into getting a new car. We will save more money and set up a food storage. It will be nice.

**UPDATE**

We did finish with the input phase of the spreadsheet and the new post about this exciting number crunching can be read here.

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