Hello small business owners! As you may know, we recently held a Debt Management Workshop, and from this came some really great take-aways that attendees communicated to us!
As always, we love to create value for our readers, so we decided to share with you what a few attendees shared with us in what they learned from the workshop, along with the an excerpt from SpendSmart's packet that they hand out with their expert advice! (Below)
Below are tips and debt management take-aways that a few attendees quoted:
- "To know that personal debt can be managed"
- "Always know my FICO and credit report details"
- "First and foremost, to rid myself of the personal debt I've gotten into before I will even decide to open my business"
- "Credit card payments strategies"
- "Saving 10% of my business income to put aside to pay off my debt sooner"
- "Understanding how to leverage my credit"
- "Investing in my debt - I have already started the formula process, and I have shared it with family and friends"
SpendSmart's Expert Advice Regarding Debt :
(From handout at workshop)
Calculate Your Debt Free Date
1. Prioritize your debt; list the debt from the lowest balance owed, to the highest balance owed.
2. Make the minimum payments on all other debt.
3. Add the Spend Smart fund ($427) and the minimum monthly payment of your first debt ($24) together. That makes your first payment $451 to debt #1. The first debt is erased in 2 months.
4. Continue to add the amount of your Spend Smart fund to your prioritized debts until each debt is paid off. Debt after debt is now being paid off at a rapid rate. You can see light at the end of the tunnel, as your debts begin to disappear.
5. A word of caution here, as you pay off revolving credit card debt do not close the accounts. This decision can be made strategically; we will look at each case on an individual basis. Closing accounts may harm your credit score; a portion of your credit score is calculated by credit history. You do not want to close a card that has a 5 year history and a $5,000 balance. Your credit score is guaranteed to be lower the next month. You may want to put them in a place that you do not have easy access, and use them to buy toothpaste every 2 or 3 months. If you prove that you cannot manage these accounts properly; you should cut up the cards so that you will not destroy your future because of you lack of discipline. The credit agencies monitor activity on the accounts; a neutral account does not improve your score at all.
6. It is now 33 months later and all of your unsecured debt has disappeared except for your equity line and home mortgage. If life does not throw you any curve balls; stick to the plan, you can then expect to pay off that home mortgage in about 7 years.