Tools

Have A Debt-Free Vacation With This Tool

Are you going to take a vacation this year? My guess is that your answer is YES. You have probably already decided when and where you want to go and have started dreaming about it. Now, how are you going to fund this vacation you’ve dreamed up? If you start planning now, you could fund it with cash!

By planning ahead of time, you can more accurately see just how much each aspect of your vacation will cost. You can anticipate travel, gas, lodging, food, entertainment and other expenses. Once you know how much your vacation is expected to cost, you can save money ahead of time!

We recommend using our Mini-Budget Tool to plan your vacation spending. You can really plan your vacation three different ways to see different scenarios and how they affect your bottom line. If you spend your money on paper, you can stay within budget during the trip.

Setting a budget and planning ahead of time is key to having a debt-free vacation. And I guarantee you, a debt-free vacation is a million times better than the alternative. You can have all the fun with your family without the stress of the incoming credit card bill.

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How Much House Can I Afford?

Are you looking to purchase a home in 2019? Many people buy a house outside of their price range and end up in a huge financial mess. This doesn’t have to be you! Before you get ready to purchase a house, you should check out our Mortgage Payment Calculator to help you decide how much house you can really afford.

Before you purchase a house, you should consider a couple of things:

  • How much should you spend on housing? Generally speaking, you should spend about 25% of your take home pay on housing. This amount can change depending on the amount of debt you carry. If you have no debt, you can likely accommodate up to 33% of your take home pay on housing. If you have a high amount of debt, you should probably only spend about 18-20% of your take home pay on housing.
  • How much of a down payment should you have? You should put down AT LEAST 5% down on a house.
  • How much should you borrow to buy a house? Generally, you could spend between two to three times your annual income on a home. This means if you make $75,000 a year, your mortgage should range from $150,000 to $225,000.

Once you have this calculator pulled up, all you have to do is enter the expected interest rate, the number of months of the mortgage period and the amount of the expected loan. You can use estimates to calculate potential mortgage payments. You can then use this number to help you decide how large of a mortgage payment your budget can really accommodate.

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Debt Freedom Date Calculator

Are you ready to pay off some serious debt in 2019? To say “goodbye” to the car payment, Sallie Mae and credit cards? If you said yes, the Debt Freedom Date Calculator found HERE on our website can really help you. This tool combined with the Debt Snowball Technique is how I became debt free and you can too!

Step One: Identify All Debts Owed (Lender, Amount Owed, Monthly Payment)

Make sure you list out all of the debts that you owe and how much each one is. You can check your credit report just to double check that you have no outstanding debts that you may have forgotten about.

Step Two: Sort Debts By Amount Owed (Smallest to Largest)

List your debts out by sorting the debts from smallest to largest by the amount owed. Make sure you have sorted by the amount owed and not the payment amount.

Step Three: Pay Minimum Payments on All Debts, Except The Smallest Debt

Make the minimum payment on all of the debts except the smallest one. It can be very tempting to start to attack your credit card bills or car payment but if that is not the smallest amount you owe, make minimum payments for now.

Step Four: Apply Any Extra Money to Smallest Debt

If you have leftover money in your budget, apply that to the smallest debt that you owe. The quicker you can see a victory, the more effective this technique will be!

Step Five: When Smallest Debt is Eliminated, Add Its Monthly Payment to Next Smallest Debt

Once you have paid off the smallest debt, take the payment you were allocating towards it, and apply it to your next smallest debt. That way, as you pay off more and more debts, you’re creating a debt snowball!

If you would like more information on this topic, check out this quick YouTube video HERE where I explain the technique and give visual examples.

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Debt Payoff Spectaculars

Did you make a resolution this year to finally off that debt that has been hanging over your head? Once that debt is gone, that payment will be freed up for you to start making progress towards your plans, hopes and dreams. If you need a visual tool that can help you gain traction in your debt freedom journey, you should check out our Debt Payoff Spectaculars found HERE on our website.

These spectaculars are incredibly easy to use and can give you a visual representation of your debt being paid off. All you have to do is take the amount of debt you owe, and divide that by the number of squares on the payoff spectacular. This will give you the amount of debt that each square represents. Each time you make a payment in that amount, color off a square!

While it may sound simple, there is something cathartic about visually marking that debt out of your life. If you’re paying off a truck, you can physically see the amount of that truck that you now own and you will find yourself wanting to color more and more squares. You might even go crazy and adjust your budget to cut your spending and allocate more towards debt!

Check out our Debt Payoff Spectaculars HERE!

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Known, Upcoming Non-Monthly Expenses Calculator

Have you ever prepared a budget and faithfully followed it only to have it crushed in the middle of the month because of an expense you forgot about? Does Christmas seem to creep up on you every year? Have you had to suddenly replace the tires on your car? Chances are, you answered yes to at least one of these questions.

These budget busters are called “Known, Upcoming Non-Monthly Expenses.” The reason these expenses get forgotten is because they are non-monthly so they tend to be pushed to the back of the mind until the bill suddenly comes in the mail. But when they do finally appear, they can create a financial emergency causing you to either break your budget or go into debt.

Think about what non-monthly expenses you know will come up throughout the year. Here are a couple of common expenses that people have:

  1. Car tires need to be replaced
  2. Heating & Air goes out
  3. Christmas
  4. Vacation
  5. Life insurance premium
  6. Property taxes
  7. Health Insurance deductible

Once you have these expenses listed out, you can plan to save monthly for them in your regular budget. Check out our Known, Upcoming Non-Monthly Expenses Calculator to do this with ease. Below is an example of the calculator in action:

By knowing what these expenses are and saving for them monthly, you’ll no longer have to “come up” with the money when the bill arrives. You will simply be able to pay the bill in cash. A cool feature of this tool is that not only does it calculate what you would need to save per month, but it also calculates the amount based on different pay frequencies. If you get paid twice per month, you would need to save $289.58 out of each paycheck. For a bi-weekly frequency, you would save $267.31. Regardless of how often you get paid, you can save accordingly and have the money available when you need it.

Tips for using the tool:

  • Be sure to recalculate your monthly savings number at least once per year.
  • Don’t forget more long-term expenses such as college, weddings, vehicle replacement, and major home renovations.
  • Make your savings for these expenses AUTOMATIC by establishing an auto-draft.

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