Debt Free Plan
The reason this plan works is because of the debt to income ratios the creditors use to determine how much debt you can have.
In other words no matter how much you make creditors will only lend you a certain percentage of your income. Your extra monthly income will go toward paying debt off.
In the previous pages you should have figured out your "roll-up" amount. Or how much you can put toward debt.
Now lets go through the nuts and bolts of how this debt free plan works.
Here is an example
This graph should give you a basic idea of what to put down. Your debts may be completely different. That's ok, just put them down. List them all. Also list how many payments you have left.
When you divide this number by twelve it will tell you how many years it will take.
For my example family it will take them 19 years to get out of debt.
We are going to say this family takes home $3500/mo. The ideal for this program would be to get at least 10% of your income to pay toward debt If you can get more it will happen even faster!
But for now we will stick with 10%. Or $350 extra toward debt each month to start with.
So take your roll-up amount ($350) in this case. And add it to your first debt payment. This makes your credit card payment $452. Make only the minimum payments to all your other debt.
After only 7 months this first debt is paid off. WOOHOO! You should feel very proud of yourself.
Then the next month take that whole $452 and add it to the minimum payment for debt #2 which becomes $488. Continue on to the next debt. Follow the debt free plan until you are out of debt.
In this example it would mean being out of debt. Including your house in 6.4 yrs.
Allowing you to build wealth from that point on.
"A man in debt is so far a slave,"