Sharing my three step process for getting out of debt

[FreshStart87]

Hi Everyone,
I would like to share my three step process for reducing debt and getting control of your personal finance.
I use a combination of three applications.
Readyforzero.com
YOU NEED A BUDGET
Wunderlist

I use ready for zero to automatically come up with a debt snowball, this way it is predetermined which debt will receive the largest payment. Ready for zero also shows you which debt will be payed off by a certain date to keep the motivation going. You can set a monthly goal of how much you can afford to pay towards debt and figure out what your debt free date will be.

You Need A Budget is where the real process is. I make sure to enter all my daily spending as it happens and know how much is left in each category on the spot. As of right now I have a capital one credit card that is paying itself with just rewards as I snowball other cards first. Ynab helps me make sure that my monthly spending is payed off at the end of the month. This way I am not paying credit just to use credit(the way the credit card company designed it for you to stay in debt).

Finally I use Wunderlist to be accountable of all my bills. Bills are listed along with due dates and must be paid in order. As each bill is paid off I check it off and it automatically populates for the next month.

I hope this can be of value to anyone trying to get off the sidewalk or looking to save up for their future startup.

 

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[theag]

Heres what worked for me to get out of debt:

1) Pay the minimum amount while building business
2) Take out some profits
3) Pay off debt all at once

 

[Paul David]

Heres what worked for me to get out of debt:

1) Pay the minimum amount while building business
2) Take out some profits
3) Pay off debt all at once

At the moment between myself and my wife we've got around $70,000 worth of debt excluding our mortgage. This is split between credit cards and loans.

So you're advice would be to continue paying the loan payments each month and minimum payments on cards then put as much money into my business then use the profits to pay off the debt in lump sums?

Sent from my D5803 using Tapatalk

 

[DrkSide]

At the moment between myself and my wife we've got around $70,000 worth of debt excluding our mortgage. This is split between credit cards and loans.

So you're advice would be to continue paying the loan payments each month and minimum payments on cards then put as much money into my business then use the profits to pay off the debt in lump sums?

Sent from my D5803 using Tapatalk

If you get a better return on what cash you put into the business then yes this is the way you should do it.

 

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[DeletedUser394]

Heres what worked for me to get out of debt:

1) Pay the minimum amount while building business
2) Take out some profits
3) Pay off debt all at once

This is actually really good. I like it.

 

[twdavis]

Heres what worked for me to get out of debt:

1) Pay the minimum amount while building business
2) Take out some profits
3) Pay off debt all at once

Seems most logical to me, however what if the debt is affecting your credit score negatively?

 

[theag]

Seems most logical to me, however what if the debt is affecting your credit score negatively?

Credit scores work differently here in Germany, so I dont know, but I think as long as you pay on time, doesnt having some debt actually build your score positively?

Anyways I had most of the debt on credit cards abroad where I studied for some time, so the German scoring agency didnt have a clue lol.

 

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[DeletedUser394]

Seems most logical to me, however what if the debt is affecting your credit score negatively?

Credit scores work differently here in Germany, so I dont know, but I think as long as you pay on time, doesnt having some debt actually build your score positively?

Anyways I had most of the debt on credit cards abroad where I studied for some time, so the German scoring agency didnt have a clue lol.

'Not paying your balance in full' as a tool to build your credit rating is a popularized myth (at least for North American scores).

The only negative to just paying the minimum that I can think of right now.. is your credit utilization rate.

In other words, if you are maxed out on your cards, it'll temporarily affect your score.

But at the end of the day none of it matters unless you need a mortgage or a car loan.. slowlane purchases. Unless you need loans for expanding, or investment property, or some shit.

For an entrepreneur though it makes sense to divert as much capital as you can to building a business. Never really thought of it that way, but since you brought it up originally it makes sense.

 

[theag]

But at the end of the day none of it matters unless you need a mortgage or a car loan.. slowlane purchases. Unless you need loans for expanding, or investment property, or some shit.

I recently finally got a credit card for my business. Bank pulled my personal credit score for it before they gave it to my business. Its a 2k/month credit card, not revolving. Thats a fraction of my monthly revenue. F*cking ridiculous.

So yea, without a good score I wouldnt even have gotten that tiny limit.

 

[twdavis]

That's the only reason I asked, like let's say my personal score is low because of past bad payment history or whatever and I am trying to rebuild and pay off all the debt because utilization (which includes outstanding debt) is 30% of your score as I understand it, so paying off the debt would certainly improve the score. The problem with allowing my score to be low and NOT paying off that is debt is, what if I want to get a high limit card such as a Cap One, Chase, Amex etc to run my business off of, what options am I left with?

 

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