Yeah, I am deviating again from the technology norm for a post. Every now and then I just feel that I need to share some of the tools that I have found that might be able to help others. In this post, I will be sharing some of the debt reduction and budget planning information I have found over time, as well as some other financial forms that come in handy.
First of all – I will admit I am a fan of Dave Ramsey, Gail Vaz-Oxlade, Suze Orman, and other financial gurus. Most of what each of them speak of come down to a single thing – common sense. Not much of what they say is new or amazing, it is just want Grandma and Grandpa (or great Grandma and Grandpa for some of you) use to do and say. Perhaps that is the problem, we have a generation growing up that only really knows plastic – they don’t know the value of cash and savings.
I am not here to talk on cause and effect, but to share information I have been able to gather over time.
Debt reduction is a simple thing to think of, but a hard thing to do. It take some serious determination to pay off your debt, and even more determination to not incur more. Living within your means is not easy in todays “me too” society, but you can do it. Once you have set your site and goal on becoming debt free, here are some great tools to help you. Also, these tools can also help you to understand your debt and how long it will take you to pay it off, not to mention how much it would cost! To illustrate, a $5,000 credit card at 13.99% with a monthly payment of $110 would take you 5.5 years to pay off and a cost of $2,163.86 in interest. Over $2k in interest, OUCH!
One of the best spreadsheets I have found can be found here – at Vertex 42
I also found a video on how to use the tool!
With a debt snowball there are two ways to approach it – highest interest first or lowest balance first. For me, I would suggest lowest balance first – that might sound odd, but it has a simple psychological reason. A person needs rewards, and being able to pay off the lowest balance first helps you feel that you are making progress. Seeing a bill come in with $0 due – is a feeling that can be amazing.
Own Up to Your Debt Worksheet (Online)
This is one I just recently found and I think it is kinda interesting. It is a worksheet from Gail Vaz-Oxlade (Til Debt Do Us Part TV Show) where you enter your debt and interest rate. The worksheet then calculates what you need to pay per-month in order to pay off your debt in 12/24/36 months. Might be useful if you combine it with the Debt Snowball worksheet above to see what you might want to be paying for debt on a monthly basis. Granted, getting out of debt in 36 months might not be 100% possible, but it is something that you should aim for.
Worksheet is online here
Ah, making a budget. Nobody likes to do this in their personal life, but we really have not problem doing this in our professional life. In work, we cannot buy something or do a project if we don’t have the money available, no difference here. Just like a business, you should be tracking every dollar that comes in and goes out. With Gail, she uses Jars for your weekly/monthly spending – so once the jar is Empty, no more spending on that category. Dave uses Envelopes, but the same principle. It is a very effective system, takes time to get used to but it is one that will prevent you from overspending. Gail provides this budget worksheet in two formats, one online and one in Excel.
Build a Budget that works (Online)
Build a Budget that works (Excel)
Those are probably some of the best (and easiest) tools out there that can get you started down the path do debt free and living within your mean.
Links to great resources on the web:
This website has some AWESOME templates – not only for budgeting, but for many other things. I strongly urge you to take a look at what they have.
Money Management Template
Home Mortgage Calculator
Auto Loan Calculator
Loan Amortization Schedule
Simple Loan Calculator
Credit Card Payoff Calculator
Money Manager for Kids
College Budget Template
List of all their Excel Templates
List of all their Word Templates
All their financial calculators
Dave has some wonderful resources, most famously his Seven Baby Steps and a program called Financial Peace University.
The seven baby steps are:
1) Start an Emergency Fund of $1,000
2) Pay of all debt using the Debt Snowball
3) 3-6 Months of expenses in Savings
4) Invest 15% of household income into Roth IRA and pre-tax retirement
5) College Funding for Kids
6) Pay off home early
7) Build wealth and give
Notice in his baby steps retirement savings comes before kids college? That is because you will need to take care of yourself when you are old, not your kids. Sounds self-fish, but actually not having to rely on your children when you are older is less self-fish then having to and taking away their freedoms.
You can listen to Dave’s radio show online here from 2pm to 5pm est as well as on the TV (check listings). He also has a podcast recording of his show and you can follow him on twitter @daveramsey
List of all his books on Amazon – HERE
Gail has a few TV shows on, one called Til Debt Due Us Part and another called Prince$$, both on CNBC. They are some good shows with some real life situations – and you can see the struggles of people just like us. With Prince$$, those are most entertaining as they usually deal with a young lady who is trying to live like her parents to, but on 1/4 the income. The pace that they rack up debt is sometimes amazing and scary. But I am not here to sell her shows – just share the good information.
Similar to Dave, she has a 12-step program to getting organized financially. You can see it here, but in short it is:
1 ) Gather all your financial paperwork
2 ) Use Internet banking
3 ) Reduce fees by setting up a buffer ($1,000)
4 ) Save automatically
5 ) Create Monthly Bill Summary
6 ) Setup your in-baskets (one 1-15 and another 16-31)
7 ) Weekly make a date with your money
8 ) Monthly reconcile your bank statements
9 ) Quarterly file your paperwork
10) Quarterly talk with your partner and talk about bumps, goals, and how you are doing
11) Annually revamp your budget
12) Clean up and the end of each year
Her most recent book, Debt-free Forever – can be found HERE