Sara’s Journey Through Balance Up – Days 19-21

Day 19…Debt Snowball

(Posting Sara’s (Single Mom’s Ask Sara) journey through the Balance Upprogram

I have to confess that I have been eyeing this debt snowball thing with much trepidation. I am very familiar with the many ways debt can snowball, and I was not excited to see I had finally arrived at Debt Snowball Day.

However, Mr. Bryan is full of surprises. Debt Snowball Day is not about the ways debt can build into a snowball, it’s about the ways you can eliminate your debt–snowball style.

I have long been a student of Suze Orman. Suze says, when eliminating debt you should pay the minimum payment plus $10 on every bill, and throw all the money you can at the bill that has highest interest rate. Intellectually, this approach makes perfect sense to me. Unfortunately, my biggest interest rate bills also have the biggest balances. It was discouraging to follow this format and never feel like I was getting ahead. Not feeling like I was getting ahead, I abandoned the plan. I lost focus and started paying bills over here, then bills over there. Still no progress.

Bryan’s approach is so much more logical to me. Here’s the plan:

1. Make a list of all your bills, list them lowest balance to highest.

2. Make the minumum payment on all your bills but the one with the lowest balance.

3. Throw as much money as you can at the bill with the lowest balance.

The result? Wa-la! That low balance bill is paid off and you get a quick win! Yeah!

Now, take the money you were putting on that bill, and apply it to the new lowest balance bill + the minimum payment you had been making. Before you know it…debt be gone!

Bryan suggests that you make a game out building your debt snowball. How much money can you apply to your bill of choice each month? Can you pack your lunch and apply that money to your snowball? How about turning down the heat a bit, making your coffee at home, or renting some videos instead of going to the movies?

This lesson comes with a web link to a debt calculator that lets you see, based on your payment schedule, how quickly you can be debt free. Can you beat the calculator?

Don’t procrastinate! Sign up!

Day 20…Should you consolidate your debt?

I finally sat down to pay my bills. I should have done this about 5 days ago. However, my only late fee appears to be a few dollars on the water bill. With my travel schedule, work schedule, and the holidays, my need for minutes far exceeded my access to minutes. Add being sick as a result of burning the candle at both ends as well, and let’s just say I am happy to pay the late charge on the water bill.

I am getting the hang of the paycheck allocation spreadsheets. I am not > quite completely proactive at assigning money to bills, but I am mastering the backend of things and allotting money appropriately for my bills. It’s only my second month at this, so I am pleased with my progress.

I went to the site Bryan suggested on Day 19 and plugged in my debts. It took a little fiddling with the numbers, but I got the hang of the chart and was able to play with different scenarios. If you recall, Bryan suggests paying off your smallest bill first so you get that feeling of a win. I am modifying this approach just a bit, as I have that stupid IRS bill hanging over my head. It has a very high monthly payment, and well, I find it to be a little nerve-wracking. While it is 3rd from the bottom on my list of balances, I have a fire in my belly to get the darn thing off the books. By following Bryan’s formula of putting minimum payments on everything else but the bill I am working on, I was able to put an extra $200 on this bill, even with the last of my Christmas shopping. I am beyond excited! I have promised my girls dinner at Olive Garden when this bill is finished and I do love my tiramisu!

Now for Day 20!

Today’s Balance UP! is all about debt consolidation. Through his counseling, Bryan has encountered clients who want to take their debt and use a mortgage based loan to just pay it off. Initially this sounds good. You trade in your interest, Bryan uses an example of $18,000 in debt with an interest amount of $1,935, and you dump this debt into a mortgage loan where you can deduct the interest from your taxes. Sounds like a great financial win.

It’s not. If you consolidate that debt into a 30 year mortgage you will end up paying $11,716 interest. Yep. You just swapped about $2000 of interest for nearly $12,000. Why? Because a principal you were going to pay off in 2 years, you are now paying off in 30, and if you add anything to it such as a car, a new TV, home repairs, new appliances, etc., the number just gets bigger. Certainly something to think twice about! Balance UP! and you won’t have to even consider consolidation! You can do it!

 

Day 21–Balancing your life–halfway there!

I am now halfway through the Balance UP! program and I have learned a lot!! I am certainly looking forward to the second half of my lessons!

Today is all about balance and goal setting. Bryan’s worksheets are, as usual, very helpful. Did you know that only 3% of us even bother to set goals? That means 97% of us are drifting around, hanging out, working our tails off, or whatever we’re doing, and we have no particular plan in mind. That certainly explains a lot now doesn’t it?

I have goals all over my walls, but I have to say I still have been a little scattered. Bryan points out that if you work on your goals each week, and improve just 1%, in a year’s time you will have improved 70.12%! (Thanks to the benefits of compound improvement.) Now who does not want to be 70% down the road to reaching their goals by the end of 2012. I KNOW I DO!

Bryan breaks down the 6 areas of a Balanced Life for you:
1. Spiritual

2. Family

3. Health & Life

4. Relationships

5. Career

6. Financial

All you have to do is follow the worksheets and give some thought to what you’d like to achieve in each area. Once you have that down, you need to ask yourself the million dollar question:

What is distracting you from your goals?

The answers to this question may be a little painful, but you can’t get to your goals until find those answers. Once you do find the answers, you may want to change your goals. For example, you think you want to be a world champion sky diver, but the thing that is in your way is that you are busy being a parent. You may need to reroute your career goals so they support your parenting versus conflicting with it. In other words,

Sometimes you need to say “NO”.

It was this very process that led me to pull back from some of my own pursuits. I haven’t been to belly dancing class in a few years, because I can’t fit it in with my kids’ schedules and needs right now. I want to publish my book so I am not even considering dating. You know what? I don’t mind any of this because I know what my goals are, and I really like the goals I have chosen. Once these goals are reached, I will write some new ones.

What are your goals? Find out when you Balance UP!

– Sara

Interested in learning more about Balance Up? 32 online lessons taken over a 42 day period for only $29.99.

Bryan Cooper

My Financial Life Coach, LLC

Delaware, Ohio

www.MyFinancialLifeCoach.net

My Financial Life Coach is a provider of financial education, coaching, web-based training,

and seminars for individuals, businesses, and non-profits.

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Filed under Budget, Finance, Goal Setting, household budget, Life Balance, Money, Personal Finance, Priorities, Time, Time Management, Uncategorized

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