While I’m away I’ll be posting some questions that readers have sent to me along with the answers. (Names have been changed)
Love your blog. Can you tell me how you calculate the money you are NOT spending? I find that I am cutting back a lot to get rid of the remainder of my consumer debt but I’m not sure if that is actually going towards my debt or to other things… which would completely defeat the purpose of cutting back! Do you put the money you are not spending in an envelope of stash it away somewhere? Thanks a lot! – Lynn
Thanks! And, GREAT question! So, I use the regular free paper check register from the bank to calculate everything and I use that as my official record rather than going off of the online banking reports or even the paper statements. Those only get used to help me make sure every purchase, cost and deposit gets input into the paper check register correctly. I get paid once a month so I went from paycheck to paycheck to determine each months savings. If you get paid every two weeks you would just do the method every 2 weeks instead of monthly.
– Get paid $2,000 on September 1. Write it in the check register.
– Pay $500 for rent. Write it in the check register and subtract from total.
– Pay $50 for groceries. Write it in the check register and subtract from total.
– Pay $20 for utilities. Write it in the check register and subtract from total.
– After 2 weeks you have $1,430 left.
– Pay day again on September 14- $2,000
So the total savings for the month would be the amount that is in your check registry right before pay day which is $1,430. With the $1,430 send a check right off to the creditors. (more explanation on my debt-repayment method here). Then, once pay day hits the new savings period starts.
To answer the other part of your question, I sent the payment for my debt off right when I had the money (at the end of the month) as opposed to keeping it until I had the total-payoff amount- that way not as much interest continued to accrue since the “total due” was getting knocked down each month. (Here’s another post that addresses some of your questions too)