Debt-Free Forever by Gail Vaz-Oxlade (the beginning after the end read novel .TXT) 📕

STEP 5: CALCULATE YOUR ACTUAL REPAYMENT AMOUNT

Time to see how much of a dent those minimum payments are making in the overall amount you owe. Brace yourself!

Subtract the total amount you pay in interest each month from that total amount of your minimum payments. The answer is the amount that you are actually reducing your debt by each month. We’ll call this your Actual Repayment Amount. So, if your total minimum payments add up to $3,060 and your monthly interest costs add up to $1,038.95, your actual repayment amount is $3,060 – $1,038.95 = $2,021.05.

Now take the total amount of your debt (the bottom total of your Amount Owed column) and divide it by your actual repayment amount. This will give you the amount of months it’ll take to get to debt-free if you keep going on this track. If your total debt is $135,630 and your actual repayment amount is $2,021.05, it will take you 67 months ($135,630 ÷ $2,021.05 = 67.11), or about five and a half years, to pay off the debt! And that’s if you don’t put another penny on credit.

DON’T GIVE UP!

If the math makes you want to run screaming from the room, that’s natural. It’s hard to face up to the mistakes we’ve made. And it’s hard to look at the details when we feel overwhelmed and out of control. But only by doing the detail, by facing the reality you’ve created, can you get through Debt Hell. (I did tell you this was going to be hard, right?)

You can go along pretending that everything is hunky-dory and keep on living in a dream world until your house of cards falls down. And it will eventually; it’s only a matter of time. Or you can take a deep breath and say to yourself, “Okay, this is a big mess. But today’s the day I start to do something about it so I don’t have to live with this crap forever.”

And so we have arrived at the big hole in most people’s thinking when it comes to using credit: when do you plan on getting that debt paid off?

Most people don’t think about getting their debt paid off. They are more concerned about minimum payments and how they’ll work them into their budget. The result: as more credit is offered, people just look to see whether they can squeeze another minimum payment into their budget.

Hey, that new furniture is only going to cost us $84 a month. That’s easy. That swanky new car is only going to cost us $376 a month. That’s easy. And if I put this dinner on credit, that’ll cost a mere $6 a month. That’s easy.

If you’re determined that you’re done with “easy” and with “debt,” then you’ll want to get that debt paid off in 36 months or less. And I’m going to show you how when you get to Chapter 5. (No matter how excited you are, don’t skip ahead! But keep your list of consumer debt handy because you’ll need it.)

DO SOMETHING DIFFERENT

You’ve been working hard with the figures and it’s time to take a break and do something different. Part of being successful with your money involves knowing what you want from your life. Let’s figure that out next.

PART TWO

MAKE A PLAN

3

DECIDE WHAT YOU REALLY WANT

What weighs most heavily on your mind when it comes to what you want from your life? There are probably lots of things competing for your limited resources. Want to buy a home? Pay off your mortgage? Buy a new car? How important is it that you have some money saved for when your kids head off to college? How about travel, is that the Big Wanna on your list? Want to be able to quit that nasty job and follow your bliss? Wish you could spend more time with your family? Want to spend less time running around and more time reading, painting, thinking?

Grab a piece of paper and a pencil and start writing. Jot down everything you can think of that’s important to you. Never mind how disorganized it is. And there are no right or wrong answers at this point. For now, you’re just noodling, coming up with ideas, creating dreams.

Often when we set goals for ourselves, they’re Big Goals. We want to be debt-free. We want to be able to quit the mind-numbing, soul-sucking job that’s stealing our time. We want to have enough saved for retirement. We want to travel and show the world to our children. We want a big, fat emergency fund, just in case.

GAIL’S TIPS

If you think you should just skip this part and keep on task with getting to debt-free, think again. Very often people spend money willy-nilly because they’ve never taken the time to figure out what it is that they really want from their lives, so they fill it up with stuff, racking up enormous amounts of debt in the process. A life is more than the stuff we’ve managed to accumulate. But to have the life you want, you have to take the time to think about what it is that you really want. Don’t skip this step. It’s important to the overall process and it’ll help keep you motivated when the going gets tough. And the going WILL get tough!

While we’re gung-ho when we set the goals, because they are big they are also long-term. And long-term goals can seem like impossible dreams when that gung-ho turns to ho-hum. No matter how big a goal, it takes small steps to get there. And taking the time to set milestones so you know you’ve achieved those small steps is the best way to stay motivated and keep on truckin’ toward your goal.

In this chapter, we’re going to look at the process of setting goals. To do so, you’ll be clarifying your values