Welcome to the latest series at JosephSangl.com – Restructuring Debt
I am excited to embark on this series of posts because interest paid toward debt is one of the largest obstacles to gaining traction for one's own Debt Freedom March.
Part One – Know What You Are Paying
I have said and will continue to say that I believe that the top causes of financial failure are disorganization and the lack of a plan. If you want to gain the maximum traction on your Debt Freedom March, you need to pay the minimum interest possible.
In many of my financial counseling appointments, we add up the amount of interest that is being paid each year, and it SHOCKS the ones who have been paying it! There is something about SEEING IT ON PAPER that really connects us to the fact that paying interest is not a healthy financial plan.
I have developed a tool to help you easily calculate the amount of interest you are paying every month and year. The [download#70#nohits] is an Excel spreadsheet tool that will help you organize your debts and clearly understand the amount of interest that is being paid on the debt.
The form is very user-friendly. All you have to do is enter the debt name, the balanced owed, the monthly payment you are actually paying, and the annual interest rate of the debt. Below is an example.
In this example, you can see that this person has four debts totaling $44,650. The big issue is that $4,317 is being paid in interest every year. In fact, only 53.6% of the monthly payments is being applied to principal reduction.
Now that we are organized it is time to look for ways to reduce/eliminate the interest being paid. That will be covered in Part Two of "Restructuring Debt"!
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