Debt Reduction, Debt Story, Emergency Fund, Savings

Get Out Of Debt – The Emergency Fund

I recently wrote about our debt reduction process – a simple one-page guide to getting out of debt. Over the next few days, I plan to elaborate on each of the steps mentioned in the article, starting today with a few notes about step 1 – and the emergency fund. My wife and I have our primary checking account with our local bank.  This allows us to deposit our paychecks locally – and is a great place for my son to find coins for his collection.  The account is interest bearing and is free. Our saving account is online – and that’s where we keep our emergency fund.  Withdrawals from our checking account and deposits into our savings account take…

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Debt Reduction, Debt Story

Get Out Of Debt – One-Page Summary Of Our Process

It’s been a minutes since I last wrote about debt reduction – so I thought I would write out a simple, one-page summary of the steps that my wife and I have taken to eliminate our debt. 1. We established a small emergency fund. We started with $1000 in cash – and our fund fluctuated between $800 and $2000 during our debt reduction process. 2. We created a (and followed) a zero-based budget. We “spent” our paychecks, on paper, at the beginning of each month, so that we would know where our money was going to go. 3. We listed our creditors and associated debts, by amount, smallest to largest. (Another option, used by many, is to list debts by…

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Debt Reduction, Debt Story

Put That First Debt Balance In The Rear-View

After establishing an emergency fund, my wife and I began to eliminate our debt.  Here’s what we did. We made minimum payments to all of our creditors.  We never missed a payment and all payments were made on-time. We listed our creditors in order, by balance owed, smallest to largest. We attacked the first balance on our list, by sending principal-only payments to our creditor.  Click to read about our success in paying off that first balance.  Eight years later, this post still makes me smile! We then attacked the next balance on our list.  Since we no longer had to deal with the first balance, we had more money to attack the second balance. We then attacked the next…

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