Now there's a decision you have to make at this
point. You need some money to "jumpstart" your situation. Somehow, somewhere,
you need at least a couple hundred dollars. The more, the better. I know you're
already feeling overloaded, and wondering where there's another $200 dollars in
your budget, but you have to find it. Even if it means you have to get a
part-time job for a while.
In this example, we are going to use
$300.
Choose the bill that has the smallest factoring number. In our
example, it was Master Card, with a factoring number of 15. Take your minimum
monthly payment, and add your $300 dollars to it, so that you're making a
monthly payment of $500.
Now, your $3000 balance will be paid off in 6
payments instead of 15.
Next, take your $500 and add it to the bill with
the next smallest factoring number. In this case, we have a choice between two
bills that have the same factoring number, so we'll take the one with the
lowest balance...Sears.
Now keep in mind that you've been making minimum
monthly payments for 6 months, so the balance has dropped by $75 times 6
payments...$450. So we started with $1500 minus $450, leaves $1050.
Now
you'll be making a $575 payment on the $1050, and have it paid in 2 more
months.
Next, the JC Penny bill
has been getting payments for 8 months, so the remaining balance is down to
$1200, so taking the $575, and adding it to the $100, will give you $675 to pay
off the Penny's bill in another 2 months, with some money to spare.
Now,
it starts getting really exciting.
Now you've got Master Card paid down to $1400 over the past 8
months. Apply your $675 to the $200 minimum payment, for a total payment of
$875, and the Master Card will be paid off in another 2 months.
Bob's
Furniture, after 10 months has been paid down to $4000, and with $875 added to
the monthly minimum of $500, gives you $1375 per month to pay off that $4000
balance. So in three months, Bob will have all of his money.
Can you see
how this is really starting to accelerate the process of getting out of
debt?
Let's see how long it will take to finish paying off the car that
has the lowest factoring number.
You've made 13 payments of $600 which
adds up to $7800 from $25000 leaves $17200 to pay off.
$1375 plus the
$600 minimum makes $1975 per month to pay off the loan's remaining $17,200. A
little less than 9 months.
The last car was at $17,000 when we started
19 months ago, and the payment was $300, for a total of $5700 paid, leaves
$11,300.
So now, $1975 plus the $300 minimum payment equals $2275 per
month that you have to pay off the second car. In just another 7.5 months, it
will be paid off too.
So now, you've paid off $16,400 worth of bills in
less than 3 years, and all that's left is the hospital bill...We'll go ahead
and figure it as it is, but usually, places like hospitals will work with you
to come up with a compromise on your actual balance, if you let them know that
you're ready to pay them off as soon as possible.
You've paid off $9000
already, and now on top of the $250 minimum payment, you can add $2275, for a
total of $2525 per month to pay off the balance of $29,000. That comes out to
11.5 months.
In less than 4 Years, you've paid off what would have other
wise taken much, much longer.
Go to the next page to read some
important tips about this process that will put you even further
ahead.
