Well..lmoe and I have discussed budgets many times in our tormentous past. Usually I would disagree...and she would push the importance.
We never came to an agreement and would usually pay off debts in a haphazard way.
Many times we would discuss a 'budget' (i hate the word..sounds so ... restrictive) and usually the discussion would get quite heated and really end up nowhere.
After many years and a good friend in Utah I came to the realization that it is beneficial to have a 'spending plan' ( i much prefer this wording). You keep yourself out of financial trouble because you 'plan' what you will spend.
Not only this but you are less likely to spontaneously spend (my worst habit).
Recently we actually make more money than we owe and now I don't feel so bad looking at our expenses each month, determining what extra we have and deciding where is best to put them.
Many of you have probably heard of 'snowball effect' regarding paying off debts. Well in doing some research I found a free Microsoft Excel spreadsheet that will allow you to put in your debts, interest rates, minimum payments and the total amount extra you have per month to put towards these debts...then it calculates based on your specifications how much to put on a given due date to knock them down systematically.
You can choose to go by biggest balance, highest interest etc. It will even show you which scenario will actually cost you more money, for as you choose the scenario it calculates the interest you might spend if you follow to completion the plan.
What I really like about this is that its totally configurable. If you month is tighter..just adjust the amount extra..if you have a windfall..adjust the extra up..the spreadsheet will calculate and adjust accordingly.
Now..not everyone has Microsoft Excel. You can install a free software called Open Office to accommodate your needs as it will open any Office document and even save into the Office formats. Let me know if this is your option as there a few extra steps to get the Excel macros to work in the debt reduction spreadsheet.
Please..if you like the spreadsheet donate to the website where you downloaded it. I love it when people contribute stuff for free and they should be compensated for there generosity. I tried several spreadsheets I found. I even paid $8 for one..and they all sucked. This one is clean, easy to follow and just very well put together.
If you don't know how much you have extra (if any) I will be posting a link at some point with a spreadsheet I have created that did it for us. You put in all your expenses (including loans etc) and the spreadsheet does the math for you. Yes I know this is really easy anyways..but what I LOVE about spreadsheets is they scalability. If you have five debts or twentyfive (like us), the formulae work the same. All you do is put in the numbers and get a answer immediately (instant gratification the framework of our American society).
I will post this sooner if I get lots of requests..otherwise I will most likely forget.
And please remember if you like either of these (or both) please donate as free software does take time and we want to keep this kind of development going. (both sites have donate links/buttons)
Tuesday, May 20, 2008
Are you looking to reduce debt? Well here is one way to do that!
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6 comments:
tres tres chic mon frere. I will look into it and let you know what I think. EVERYONE needs a good plan. I hate the word budget too, it makes me cringe. I mostly just try to do thoughtful spending but thats not good enough. Speaking of spending, I need to donate to Ben.
"Spending Plan" that's a good phrase! Thank you for the link. You are awesome.
I love this suggestion. We have always used some form of Spending Plan or another, but usually come back to using lmoes' envelope idea that she used before you were married, something about looking into the grocery envelope and seeing just $20, makes me only spend $20, and I never go over. So, while developing your spending plan, listen to your woman, she's a smart one with finances. Sometimes I wonder if Dad had Mom around longer if we would have been so tight with finances growing up... maybe, something tells me 9 kids will do that to you no matter how good you are at planning your spending.
I like. I've done a spending plan, but couldn't include the effect of interest, as I was doing it by hand and it's a little hard to calculate all that without killing your brain a little. This is nice tho. Only one problem- it only allows you to make extra payments on one at a time, and I figure it's best to make extra payments on three or four at a time, knock down a few birds each month.
I wonder if it depends on what you have extra and also which option you choose. We have about a $1000 extra right now and so we are able to pay on 3 or 4. I am not sure what formula it uses to determine which to pay first and how much. I wonder if there is a way to adjust it. Interesting observation.
i think it is a great idea. I want to show nate and see how we can implement everything. Thanks! show us yours.
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