Financial Friday: How much and How Long?

>> Thursday, October 15, 2009

As a professional nanny we can see our employers spending hundreds if not thousands of dollars on items at the drop of the hat. At times this can cause a nanny or anyone for that matter to try to "Keep with the Jones". This is what can sometimes get a nanny into debt.The past 3 weeks we have gone over how to set up a budget and track daily expenses. This week I will share with you a great little tool online called a Debt Management Calculator.

This is what you need to get started:

  • your credit cards

  • bank loans

  • car loans

  • mortgages

  • school loans

For each of these debts (up to 9) you will need:

  • the current balance

  • the interest rate-is it fixed or special rate for 6 months etc? You will need the APR's payment due

Then you will also need (based on setting up your budget from the previous weeks)

  • Your monthly budget savings: Money from your current budget that you can apply to your debts

  • Income raises: Any anticipated raise to your monthly income that you can apply to your debts

  • Cash 'windfalls': Any one-time events that will increase the cash you have in a given month

I will share with you that I do NOT put any bonuses in this amount of "cash windfalls" as the amount is unpredictable. I do not put raises either as they vary from year to year. I know that I have an additional amount of money that is not allocated for my fixed and flexible spending in my budget. This is the amount I use for my budget savings.

Then you go to the Bankrate's Debt paydown calculator and follow the questions. At the end of the questions, it figures out how long it will take you to pay off your debt. For my debt and what I can pay monthly on it, it says 30 months, which will be April 2012.

There is also a chart that is included to tell you how much to pay on the debts each month. This is so awesome to me as it shows me monthly how my debts are going down and how close I am getting to becoming debt free. I have printed out this out and have it sight daily so I can look at my debt end date.

When will you be getting out of debt?



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