Climbing a mountain of debt one step at a time
6. maj 2009
My wife and I have decided to get rid of our substantial mountain of debt.
Fortunately there is an aboundance of personal finance blogs available, offering (free) advice on how to do it.
The long term goal of our efforts is to adapt a Simple Living (frugal) lifestyle which is paid for with passive income that exceeds our expenses.
This vision is inspired by such books as “Your Money or Your life”, and will allow us to travel (frugally) and put our time to use without having to think of being paid.
The Debt Snowball will help us reduce our debt in a structured way, by paying off our loans one at a time starting with the smallest loan. Get your full explaination of the Debt Snowball at Get Rich Slowly.
A Financial map will give us the consistant overview of our finances that we need. Bargaineering tells you how to do it, and you can see the initial attempt on our financial map here.
Our reason for having a budget is to see how much money we have to make each month and to see where we can cut back and how much is available for our emergency fund and debt reduction. Man vs. Debt discusses the purpose of a budget, and Debt Free Adventure talks about how to make a budget, check them out.
Automatic bill payment is something that we’ve alway used, but to actually aim for full financial automation is new and exciting. It involves taking a look at the financial map and making sure that as many transactions are automated as possible. Not just bill payments, but also loans and tranfers to savings. Ramit Sethi of I Will Teach You To Be Rich wrote in a guest post on Four Hour Work Week about how to automate your finances.
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What are your thoughts about this topic?