The game plan...

I have never read or watched Dave Ramsey but I have heard bits and pieces of his pilosophy from other people. I honestly believe in paying off the smallest debts first to get them out of the way (most of the time). This is coming from someone who has 2 sets of bills each month. I refer to mine as the beginning and end of the month bills. We own a small business and I pay out over 60 bills per month. Keeping up with them can be a challenging while having 1,001 other things to do in a day.

I, personally like to write out each check. I know it is far more time consuming but I like being able to look at the bill, verify everything is correct, then issue the payment. I have been a victim of identity theft in the past and you can never been to watchful of your accounts. This is why I chose to not do direct pay at this point.

The game plan is simple -
I used a spread sheet on excel (in the templates) to display all my debt. It is set up something like this.....

Name (of company owed) - Total Amount Owed - Monthly Payment Amount
(I also set up my spreadsheet to do a percentages to see who gets most of my money)

I have 2 sets of graphs in this spread sheet. Both are labeled as above but the 1st one is for loans, credit cards and bills that are the same amount each month. The 2nd graph if for my variable expenses. If you use Excel there is a template that is great to start off with as a foundation. I just tweaked mine due to the amount of bills I have and the types of debt.

Now I have a full picture of where I am at and don't want to be. I then can assess which bills to pay off first. I look at 2 parts of the debt before making a decision.

The amount of the debt and the interest rate.

For example; I have a SUV that has 0% interest. I chose to not make any additional payments and not put it as a priority since it would not benefit me as much as the credit card that has a $1,000 balance and 39% interest. The minimum payment on the credit card is $50 a month.

It would take me 33 months to pay off that card if I made a minimum payment. This would = $650 in interest paid. If I paid the SUV off, I would have 1 less debt but if I paid the credit card off, I would save $650.00!

Link to credit card calculator @ Bank rate web site (free)