Debt Elimination
That is our national debt. America’s in big trouble.
What’s worse is that it’s not only on a federal scale. The average American household is estimated to have $9,000 in just credit card debt - this isn’t including car loans, mortgages, personal loans or (Heaven forbid!) payday loans. The ominous “they” also say that 70% of Americans are living paycheck to paycheck. That means that if that American misses one paycheck from, say a medical emergency, that American is now that much closer to another payday loan, bankruptcy, or even living on the streets.
The wise Mahatma Gandhi said “Be the change you wish to see in the world.” Change always starts with you.
My Husband and I started 2007 with $40,000 of debt - a mix of credit cards, loans and student loans. We ended 2007 with $35,113 of debt meaning we managed to eliminate $5,000 of debt despite our AGI (adjusted gross income) being less than $25,000 last year!
It was also late in 2007 that I discovered a man named Dave Ramsey and his fabulous baby steps. They are as follows:
- $1,000 to start an Emergency Fund (DONE as of 1 May 08!)
- Pay off all debt using the Debt Snowball (In Progress!)
- 3 to 6 months of expenses in savings
- Invest 15% of household income into Roth IRAs and pre-tax retirement
- College funding for children
- Pay off home early
- Build wealth and give!
- Invest in mutual funds and real estate
This makes perfect sense to me!
Our debt snowball looks like this (as of 1 May 2008):
To budget, I actually use an amazing system I found called “The Pear Budget”. It’s just brilliant.
To follow the weekly rants, watch this space.
