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Debt Free Killing Fund – How To Pay Off Debt Without A Extra Income

creditcard cut up

 

Debt Free Killing Fund - How To Pay Off Debt Without A Extra Income

 

1.) Selecting the Card

So lets say you have a credit card debt of $3,000 and another of $5,000 both with the same interest rate. You will take the smallest balance of the cards. If you have a higher interest rate on the $5,000 credit card you would want to choose that one first then.

 2.) CUT, STOP, SMILE
Now you are going to take that card out of your wallet and CUT it Up! No re-ordering a new one either!! Just Cut it up and forget about using it. You have to remember credit cards are a loan to you it is not money you have so stop using it. If you don't have the cash to buy something then you can not afford to buy it. Plan and simple so stop borrowing money because you will never be able to save up money to buy the things you do want. So cut up the card, stop using the credit card and put on a big smile because you are on your way to saving hundreds of dollars from it.

3.) Creating a Debt Free Killing Fund (DFKF) - A monthly fund you will use only to pay off your credit card.

A Debt-Free-Killing-Fund (DFKF) is basically "free money". This is money you have saved from other expenses, such as using coupons, saving on your electricity bills, and other monthly bills. So for an example, if you average electricity bill is around $200.00 and you started saving on your electricity by unplugging your appliances when not using them and so on, Next month your bill goes down by $50.00. Let also you save $20.00 in coupons one month as well. You will take this money and put it into your Debt-Free-Killing-Fund.

4.) Applying your DFKF to your minimum monthly payment on your credit card.

Now you are going to take the money you have saved this month that you put into your Debt-Free-Killing-Fund and you are going to add it to your minimum required payment on your credit card that you chose to pay off and have stopped using and cut up! Note that I have said "add it to your minimum required payment" This is because you should have already have money put aside to pay the minimum balance each month. So lets say on your $3,000 Credit card your minimum required payment is $50.00 and you have saved $70.00 in your Debt-Free-Killing-Fund you will then put $120.00 on to that credit card.

 

5.)Avoiding the minimum payments

Even if your Debt-Free-Killing-Fund changes each month make sure you are not only making the minimum payment on your credit card each month but applying any extra money from the DFKF each month as well even if its a extra $5.00. You never want to just pay the minimum payment on your credit cards. This could take years to pay off.

Take a look at the chard below. So if you have a $3000 Credit card with a interest rate  of 19% and you only paid the minimum payment of $60.00 a month it will take you 44 years and 2 months to pay off that card. That is a lot of interest and money you are losing. All because you thought you found a great deal on a TV for $1000 that was normally $1500 and you thought wow I am saving $500 when in reality your losing thousands of dollars all because you put it on a credit card and paid for it with money you don't have.

Balance $1000 $2000 $3000 $4000 $5000
Interest Rate Years to Pay off       if only paying a 2% minimum monthly payment1
10% 10.4 15.3 18.3 20.3 21.8
11% 11.0 16.3 19.4 21.6 23.3
12% 11.7 17.4 20.8 23.2 25.0
13% 12.4 18.7 22.3 24.9 26.9
14% 13.3 20.2 24.3 27.1 29.3
15% 14.3 22.0 26.5 29.7 32.2
16% 15.6 24.3 29.3 32.9 35.7
17% 17.3 27.1 32.9 37.0 40.2
18% 19.3 30.9 37.6 42.4 46.1
19% 22.3 36.1 44.2 * *
20% 26.4 43.7 * * *
21% 33.2 * * * *
22% 46.1 * * * *
23% * * * * *
24% * * * * *
25% * * * * *
26% * * * * *
27% * * * * *
28% * * * * *

 

With this chart here you will be able too see how long it will take you to pay off your credit card if you are paying more onto your credit card. So instead of paying the minimum of 2% you are paying 10% onto your credit card. You noticed you will be paying less over the years.

Balance $1000 $2000 $3000 $4000 $5000
Interest Rate Years to Pay off      if only paying a 10% minimum monthly payment1
10% 3.0 3.6 3.9 4.2 4.3
11% 3.0 3.6 3.9 4.2 4.4
12% 3.0 3.6 4.0 4.3 4.4
13% 3.0 3.7 4.0 4.3 4.5
14% 3.1 3.7 4.0 4.3 4.5
15% 3.1 3.7 4.1 4.3 4.5
16% 3.1 3.8 4.1 4.3 4.6
17% 3.1 3.8 4.2 4.4 4.6
18% 3.2 3.8 4.2 4.4 4.7
19% 3.2 3.8 4.2 4.5 4.7
20% 3.2 3.8 4.3 4.5 4.8
21% 3.3 3.9 4.3 4.6 4.8
22% 3.3 3.9 4.3 4.6 4.8
23% 3.3 3.9 4.3 4.7 4.8
24% 3.3 4.0 4.4 4.7 4.9
25% 3.3 4.0 4.4 4.8 4.9
26% 3.3 4.1 4.5 4.8 5.0
27% 3.4 4.1 4.5 4.8 5.1
28% 3.4 4.2 4.6 4.8 5.1

 

6. On to The Next One

Congratulations, Your Card is Paid Off, So once you have paid off this $3,000 credit card now what, Now you are going to move onto your next credit card. So take your credit card of $5,000 and repeat these steps! Most important Step number 2!! Stop using the card, Cut it up and smile!!

Don't forget to take the money you are saving each month from having your $3,000 credit card paid off and putting that money into your debt free killing fund. This will help you to be able to pay the $5,000 Credit card off just as fast. Because now you have that additional $60.00 a month from this credit card already going into your debt free killing fund.

7.)Congratulations!

You are now on your way to be debt free sooner! Just remember NEVER make minimum monthly payments on your credit card. Stop using your credit cards to pay for things if you cant even pay for it by cash. You are paying so much in interest. So remember next time you want to make a $1,000 in purchases with your credit card. You can only make the minimum monthly payments on it every month it will take you around 26 years to pay it off not only because you will be only paying $20.00 a month but you will also have to add the extra $16.00 a month in interest. So really you would only be bringing your bill down by only $4.0o a month. Just something to think about.

 

 

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