Debt Stacking

If you are making monthly payments on several different credit cards I can help you prioritize your efforts in seven simple steps:

1) Collect all of the monthly statements you can track down.
2) Organize the statements by placing them in separate piles based on the card issuer.
3) Organize each pile in descending order based on the month. (The current month should be on top.)
4) Paperclip or rubber band each individual stack.
5) Place the stacks in a single descending order pile based on the of the Annual Percentage Rate (APR) of each individual stack. (Highest APR on should be top.)
6) You have just created your debt stack. If you pay more than the minimum monthly payment on your credit cards you should stop doing so. That's right, reduce the monthly payment on each card to the minimum and then apply the difference to the payment made to the card that is on top of your debt stack. If you are currently only making the minimum payments on all of your bills then you should focus all of the extra money you can afford to spend on the card that is on top of your debt stack.
7) Once the card that is on top is paid off apply the payment you were making to the card to the next one in your debt stack.

This approach will help your prioritize your payments and accelerate the payoff of your debts.

FREE Debt Reduction Spreadsheet

If you are like us and you enjoy entering payments on amortization schedules to see how quickly you can pay off debt you'll love this article.

We had an excel expert to design a worksheet to assist in determining a course of action in regards to paying off credit cards. The worksheet allows users to enter data and run scenarios to determine the best options for the user. The spreadsheet variables include: Card balances, interest rates, current payment amounts (not minimum payment), minimum payments, card fees, introductory rates, introductory rate expiration dates, and extra payment amounts.

So what's the catch you ask? We're only giving away the spreadsheet to the first 20 individuals who subscribe to our site. In addition, we're also offering a money back guarantee!

(Just kidding on the money back guarantee, the spreadsheet is free.) Enjoy!

Planning 101

We believe setting goals without creating plans to accomplish them is similar to wishful thinking. Wishful thinking may make you feel good however it produces no fruitful outcome. For real results you need to create a plan, which is really a series of steps to perform. Creating a plan to reach your goals isn’t as daunting as you might think. To assist you we’ve listed an approach to creating a plan below:

1) Document your goals in writing. The process of collecting your thoughts and documenting them allows you to clarify your goals. The more specific your goals are the easier it is to create steps to achieve them.

2) After reviewing your goals, think about the steps can you take today, tomorrow, in the future, to make them a reality. Write down these steps and assign a date to them that you would like to see the step accomplished.

3) Review your documented goals and steps every morning and every evening. This reminds you of the importance of your goals and keeps them fresh in your mind. If you think of additional steps during your review write them down and assign them a date as well.

4) Perform the steps. Completing the steps you have written down is your plan to achieving your goals. Ask yourself, “What can I do today that will take me a step closer to my achieving goal?”

5) Share your goals and steps with others. Sharing your goals allows you to internalize them. It also allows people to help you achieve your goals as well as support and encourage you along the way.

6) Don’t give up! Your goals will not be achieved in one day. Goals are achieved by completing steps over a period of time. By completing each step along your plan you become closer and closer to achieving your goals.

Building Equity for Refinancing

The economy has really battered home prices in Florida. We purchased our home in March of 2005 right about the peak of the housing bubble. I had accepted a new job in Florida so we needed to find a home quickly. Don't get us wrong, we love living in Florida, and we love our house, so we'll do what we must to stay. (Go Rays!)

Now that mortgage rates are at an all time low we would like to refinance our home to lower our payments. However we are concerned that our equity has sunk along with economy. So here are our thoughts to boost our home equity.

1) We have found that a minor kitchen remodel is hands down the top choice in terms of the best return on investment. Statistics indicate that a well executed remodel will net an 88-percent ROI. Based on this ratio a remodel of $3,000 may increase our equity by $5,640.

2) A bathroom remodel is another great choice which reflects an 81-percent ROI. A $2,000 minor remodel should approximately yield an equity increase of $3,760.

3) An additional way to increase equity if you are close to the value you need is to make additional principal payments. Most loans have an option that allows you to make extra payments toward the principal in addition to the basic payment.

Using all three of these options we believe we can refinance our home to receive lower payments and enjoy our new kitchen and bath as well.

Savings on Credit Monitoring

We use CreditKeeper (HSBC) to monitor our credit activity. The monthly fee was $9.95. We also use another service, True Credit, due to an error found on our TransUnion Credit report. The monthly fee for this service was $14.95. We decided to cancel CreditKeeper since it did not reflect the details we needed for TransUnion. After calling CreditKeeper to cancel the service they agreed to reduce the monthly fee to $6.95! That's a $3.00 per month savings or "snowflake". Since the TransUnion issue is resolved we decided to cancel True Credit and bank the $14.95 savings in our snowflake account along with the $3.00 detailed above.

Prioritize Your Credit Card Debt to Maximize Payments

If you have several credit cards with balances, prioritizing your debts can make better use of your payments. This technique improves the allocation of your monthly payments through a process we call "Debt Streaming". Debt Streaming maximizes your payments to ensure you receive the best results possible based on your existing payment structure.

The technique works like this:

• Track down all of your credit card statements.
• List your credit cards including the interest rate, balance, and the amount you are paying monthly.
• Sort the list based on the highest interest rate to the lowest interest rate.
• Add up all of the payments you have been making to determine the amount you are currently Debt Streaming. (This is assuming your payments are more than the minimum payment.)
• Make the minimum payments on all of the account except for the account with the highest interest rate.
• Pay as much as you can on the account with the highest interest rate.
• Once the account with the highest interest rate is paid off apply the payment amount you were making to the account with the next highest interest rate.
• Continue to follow the steps listed above and you will begin to rapidly shrink your debt balances.

Easy Long Term Savings? Review Your Credit History!

An easy way to reduce your future expenses and piece of mind is to review your credit history. It has been reported that a high percentage of consumer credit reports, up to 70 percent, contain errors. This is staggering since even small credit report errors can cost you thousands of dollars in higher interest rates over the long run.

To assist our readers we are reviewing several credit monitoring sites and we will report our findings in a new post. (We currently use CreditKeeper and TrueCredit so both will be in our review.) If you have suggestions for our review please leave a comment.

In our research we found an interesting advertisement for a credit program. The link to this offer can be found here =>Credit Secrets. We have not yet evaluated this program.