Calculating Pay Off and Savings

One way to calculate the fastest way to pay off my debt is to use an Excel Spreadsheet. I have seen this suggestion many times, but I am not that good at creating complex spreadsheets. I really want to be able to plug in the numbers, how much I owe, balances, minimum payments and so on, and then play around with them. I would like to see if it is faster to pay off high interest first or pay off the smallest ones, or the ones with the biggest payments.

So, since creating an Excel spreadsheet is not for me, I went searching on line for a good debt pay off calculator. I found several, but most of them only let me put in 8 or 9 debts maximun, and I have at least 14. The one I decided to try is by CalcXML and seems to be able to handle a practically unlimited number of debts. It will let me rearrange my debt payoff scenario in 3 ways:

1. Lowest to Highest Balance


2. Highest to Lowest Interest Rate


3. Shortest to Longest Payoff Period

The only problem is that once I have entered all my debt, and done my different calculations, I can only save the results to a PDF. So, if I want to come back later and add another debt or change something I have to type it in all over again. But it is a great, free program.

I also have the "Debt Free and Prosperous Living" Debt Payoff Calculator on my computer. That is the one I have been using daily. I got it with the 30 day trial. I sent back all the materials after reviewing them, but I still have this software on my hard drive. It is well worth having if you are serious about doing this because you only have to enter the information once, and it has a lot of different "what if" scenarios you can try out. By the way, I thought the materials they sent were pretty good and I really did study them. But, in the end, I didn't think there was enough in it for me to justify the cost so I exercised my right to cancel and sent it all back.

So, back to using the pay off calculator. Which ever one you choose, they all pretty much work the same way. List your debts, balance, Interest Rate, and Minimum payment. Do your calculations and see how long it will take to pay it all off at your current pace, just paying the minumums. For me it is almost 6 years and 4 months at a total cost in interest of $24,000.

Okay, now I am going to see how much faster I can pay it off without spending any extra. I am going to pay off each bill and then roll over that minumum payment to pay off the next bill. According to the calculator, I would pay off my debt in 3 years and 8 months! That is 2 years and 8 months sooner and I will save $8353.00 in interest. And, that is without adding any extra money.

Let's see what happens when I add the $135 a month that I found by cutting my payments down to the minumum. Now my debts would be paid off in 3 years and 5 months, so the extra money cuts the time down by 3 months. I would save an additional $1,475 in interest. I like the idea of paying it off as fast as I can, but I wonder what would happen if I just saved the $135 a month. I am going to put this into a savings calculator. Let's see what it comes up with.

I am going to use a free Compound Interest Calculator from "The Converter Site". Here is a screenshot

Use the regular deposit calculator and start with zero if you have nothing in savings. I used 1% interest rate, but if you can get a better rate, use that. I put in 4 years, because it won't take partial years, but I should have my debt paid off in 3 years and 8 months. I want to see how much I would have if I saved that amount instead of rolling it into my debt. My regular deposit will be $135 a month.
Here are the results:


At the end of 4 years I would have saved $6,614.00 but it will cost me an extra $1,475.00 interest on my debt. So my net savings after 4 years would be $5,139.00. I am no financial whiz or accountant, but I like the idea of paying off my debt AND having savings, so I think I might do this. What do you think of this idea? Did I do the math correctly or am I missing something?

The Juggling Act Part Two

I added up what I pay nowand it comes to $2,522 a month. And, I have gotten my most recent statements to find out what the current minimum payments are. Here is what that looks like
Line of Credit currently pay $545 a mo actual min due 541 difference is $4 a mo
Visa one 275 a mo 270 5
Visa two 205 a mo 205 0
Personal Loan 205 a mo 205 0
Medical Credit Card 165 a mo 159 6
I don't know, so far I have $11 a month. Maybe this idea won't work, but I will do the rest anyway.
Master Card one 165 a mo 159 11
Credit Card one 160 a mo 154 6
Veterinary Credit Card 135 a mo 130 5
Master Card one 50 a mo 25 25 !!
Visa three 19 a mo 17 2Furniture 109 a mo 109 0
Car Repair Card 89 a mo 39 50 !!!!
Auto Loan 350 a mo 350 0
Office Store Card 50 a mo 25 25 :)

Looks a little more promising, so let me add them up. The total difference is....
$135 a month!!! Okay, it may not seem like much, but I'm excited. I don't have any month left over at the end of my money, so finding $135 is very cool!
Now I am going to start playing around (on paper of course) with the best way to use this money to pay down the debts faster, because right now it is all going into the black hole of monthly payments and doesn't seem to be making a dent in my balances.
What do you think of this. Have you taken a look to see if you might be doing the same thing? Do you think this will work?

The Juggling Act

Today I am going to learn how to juggle. Actually, I have been juggling for years. Delaying one payment for another, taking money from one place to pay a more important bill somewhere else. It really wears me out to keep all those balls in the air. So far, it's been working, very few late payments, no collections. But if I let just one ball fall, I'm afraid everything will come crashing down. I need to find a better way. So, I guess I know how to juggle, but I want to be a pro juggler.
Today's plan is to add up all the payments I am making, and see which ones are more than the minimum.
Once again, here is my list of debts. I have not included regular bills, like utilities and insurance, just my debt.
Line of Credit $30,016 bal $545 a mo 9% int
Visa one 8,119 bal 275 a mo 26% int (WOW, I know)
Visa two 11,000 bal 205 a mo 11% int
Personal Loan 5,463 bal 205 a mo 8.25% int
Medical Credit Card 6,664 bal 165 a mo 11.9% int
Master Card one 9,165 bal 165 a mo 9%
Credit Card one 7,695 bal 160 a mo 4.9%
Veterinary Credit Card 2,070 bal 135 a mo 23%
Master Card one 1,009 bal 50 a mo 12%
Visa three 853 bal 19 a mo 9%
Furniture 1,600 bal 109 a mo 0% (I did buy some furniture)
Car Repair Card 1,565 bal 89 a mo 22%
Auto Loan 1,891 bal 350 a mo 5.75%
Office Store Card 261 bal 50 a mo 24%
The monthly payments add up to $2,522.00 a month. I already know that. But the point is to see if there are any that are more than the minumum. I use online bill pay from my bank to make the payments automatically. The same amount each month. So, I am assuming some of the minimum payments have gone down as the balances have declined. I just figured I would let the little bit of extra go to paying down the balance a little faster. But I want to see if there is a better way.
So, I need to drag out all my bills, and take a look at the current payment due. This will take a while.
Are you a juggler too? What do you do to keep all the balls in the air?

The EF Effect

This feels pretty good. I found $150 a month by cutting back on utilities and cell phone bills. I know there must be more, but for now I am starting with this. If I put the $150 in the bank every month, it will take 16 months to save up the $2,500. That's not including interest, but savings are paying less than 2%, so the interest might amount to about $20 a year. Now, the whole point of an ef is to have emergency money so I won't have to turn to credit. So, a little more calculating. At $150 a month, I will have $300 available in 2 months, and $600 available in 4 months. Within 10 months, assuming I haven't had to dig into it, I will have about $1500. If I get a surprise car expense or an appliance needs repair, I won't have to turn to credit. My ef isn't for retirement or vacation or anything else. While I would like to hold on to it, I plan to use it instead of a credit card to meet unexpected expenses.
But, back to the quandry. Can I save for an emergency while getting started on debt reduction? I don't know yet. So far my expense cutting has resulted in extra money for savings, not debt reduction. Where can I find that?
I am going to take a look at my monthly payments. I have been paying the same amount on most of them for a long time, not taking into account that the minumums have gone down as the balances went down. Maybe it's not much, but I want to look at what I am already paying and see if I can juggle that around to pay down the debt faster, without adding to our expenses.
What would you do? Do you think this is any better than any other plan?

Building an Emergency Fund

How to build an emergency fund while still paying down my debt? Big question. I decided to go back to my list of things to do.
1. Stop making more debt
2. Cut my expenses
3. Save up an emergency fund
4. Pay down the debt I have faster
5. Make more money
Even though stop making more debt is #1 on the list, that's going to be hard unless I do #2 and #3 first.
We have a lot of expenses, but at first glance, there seems nowhere to cut. We have pretty large utility bills. Gas, electric, water and trash collection. Our phone bill is tied in with our cable tv and internet. One big expense is the cell phone bill, over $200 a month for 2 phones. It would seem that cable tv could go, but that is pretty much our only entertainment. We really don't go out to movies, and we are getting the bundle price for all 3, and I can't give up the internet. Where to start?
During this hot summer, my son and grandson were here all day, and our electric bill topped $700 for one month because of the air conditioning. I was jumping mad. I spent $50 for a programmable thermostat, and set the temperature at 78 degrees F. May seem mean, but when it's over 100 degrees outside, it felt pretty comfortable. I also went on a kick about turning off lights, tvs and anything else that sucks electricity. The next bill went down to about $280, still a lot, but much better. We have been able to keep it at an average now of about $200 a month, which I figure is about a 10% reduction over all, so $20 for my emergency fund. (ef)
I did pretty much the same type of thing with the other utilities. We water the grass once a week, and have a rain guage on the sprinkler timer which shuts them off when it rains. We have cut our water bill by about 10%. $10 for the ef. We cut our gas bill by using the same thermostat to keep the house at about 68 degrees during the day, and turn it up to 70 degrees at night. Another $20 for the ef. Hey, these are adding up!
I called the cable company and threatened to move my service to satellite tv, their only competitor. It took some doing, but by threatening to cancel, I was directed to the "retention department". They have offers that the regular reps don't. I was able to cut the cable bill by $25 a month.
Then I went to work on the cell phone bill. I had an unlimited plan that cost $100 a month. In the past I needed it, but I don't use the phone as much anymore. Staying with this plan has really cost me, but I liked all the extras like internet, GPS and traffic information. My husband barely used his at all for calls, but he also likes the internet and traffic. There are lots of companies out there, but we are in a contract, which means early termination fee (etf) and some of the cheapest companies like Boost Mobile or Metro PCS require that you buy a new phone. Everything is relative. They are month to month and have no etf. I have called to cancel in the past and have gotten pretty good deals from the retention department, but this time I really needed to reevaluate the plans. We decided to stay with our current carrier, but change to lower minute plans with free cell to cell and free internet and GPS Navigation. We didn't have to extend the contract, so I still have the freedom to shop when the contract is up in March of next year. This saved us $75.00 a month.
So adding up the savings, let's see where I am at.
$20 off the electric bill
$10 off the water bill
$20 off the gas bill
$25 off the cable bill
$75 off the cell phone bill
The grand total is $150 a month. Better than I thought. Of course I would rather spend that money, but I am going to put it to my ef.
What do you think of my ideas? What would you do differently?

Five Steps to Cut Debt

It's common sense that there are three things I need to do to cut my debt.
1. Stop making more debt
2. Pay down the debt I have faster
3. Cut my expenses
4. Make more money
Oops, I guess that's four things I need to do. For the most part, I have stopped making new debt. Except that my car needed serious repairs this month, which went on my Auto Repair Card, becuase I don't have any emergency cash. So, it seems to me that an emergency fund is really important to not making new debt. That is item number five.
5. Save up an emergency fund

What order to do these items in? It's pretty obvious #1 is key, so that is the first item on my list, but without emergency cash it will be hard. Cutting my expenses would be one way to keep more cash, so I am making that #2 on the list. Now my list looks like this
1. Stop making more debt
2. Cut my expenses
3. Save up an emergency fund
4. Pay down the debt I have faster
5. Make more money

The problem for me is that I want to be reducing my debt at the same time that I am saving for the emergency fund. And how much should I have in my emergency fund? At first I thought $1,000 would be enough, and it would be a great start. But with our older cars and our house payment as well as house maintenance, I would feel much more secure with a $2,500 fund. So, that will be my first savings goal. Now, how to do this without putting off my debt pay down for a year or two? I am going to look at our expenses to see where we can cut down. Any money I can cut out of my expenses I am going to (try) to put toward saving.
What do you think? Do you have an ef? Has it helped you stay out of new debt? How much is enough?

Adding it up

I have been afraid to add up all of my debt. But, I can't get where I need to go if I don't know where I am now. As hard as it is, this needs to be done.

Line of Credit $30,016 bal $545 a mo 9% int
Visa one 8,119 bal 275 a mo 26% int (WOW, I know)
Visa two 11,000 bal 205 a mo 11% int
Personal Loan 5,463 bal 205 a mo 8.25% int
Medical Credit Card 6,664 bal 165 a mo 11.9% int
Master Card one 9,165 bal 165 a mo 9%
Credit Card one 7,695 bal 160 a mo 4.9%
Veterinary Credit Card 2,070 bal 135 a mo 23%
Master Card one 1,009 bal 50 a mo 12%
Visa three 853 bal 19 a mo 9%
Furniture 1,600 bal 109 a mo 0% (I did buy some furniture)
Car Repair Card 1,565 bal 89 a mo 22%
Auto Loan 1,891 bal 350 a mo 5.75%
Office Store Card 261 bal 50 a mo 24%


This is awful, but I included everything except the mortgage. Adding it all up it totals $87,371.00 if I did my math right. The total monthly payments are $2,522 a month. That doesn't include the house. I would like to accelerate that too, but right now, I need to concentrate on these debts. Also, I have NO Savings. Nada, nothing. It ALL goes to pay the bills and pay expenses.
The next thing I need to do is figure how long it would take me to pay these off if I just kept making the minimums. So, I plugged all these into the Debt Payoff Calculator at CNN Money.Com. There is a link to it under Free Resources on the right column of this blog, if you want to try it. Anyway, at the rate I am paying these it will take me about 20 years and cost me approximately $20,000 in interest. Even after paying all these off I will most likely still not have what I really want: Security and the knowledge that my husband and I can enjoy a comfortable retirement. I don't see room for saving an emergency fund, or funding our retirement account, or doing badly needed repairs and updates to our house. Forget about a vacation, we haven't had one in years. I really, really, really have been thinking a lot about bankruptcy. Frankly, I'm worried. I haven't been sleeping much, and if I try to talk to my husband about it, we will just fight. It is really putting a strain on our marriage. I need to figure a way out. I have 2 goals, pay off the debt AND save money. But how to do both at once? Let me know what you think. What have you done to save for a rainy day? Is it working?