Be Intentional Challenge #21 - Create Your Debt Overview (with Free Download and Debt Calculator Included)

We are now on day #21 of our Be Intentional Challenges! We hope it has been wonderful, productive and life-changing so far.

And if you don’t know what we are talking about….. read on!

The 30 Be Intentional challenges this month are designed to get you on the right foot, the right track and give you energy, efficiency and organization which will propel you into a life that is able to develop an overall financially smart, happy and frugal home. We are going to have different themes each month this year (and we have very exciting stuff planned) and this month is your foundation!

We encourage couples and families to do these challenges together so the whole house can function well!

As the 30 days go along, we will be focusing on 5 areas for the Be Intentional Month:

Self
Home
Budget
Schedule
Frugality

Here’s the previous 20 challenges in case you missed them and want to get your life on the right track:

We want to really start diving into getting rid of debt. For those of you that don’t have any – CONGRATULATIONS! That is a huge accomplishment to have either paid if off, or stayed out of debt. And for the next two days…. focus on how you can improve the previous 20 challenges while we focus on the households with debt 🙂

And for those that still have debt, YOU WILL GET RID OF IT! You will have that day where the chains feel like they have broke and you are free. It is truly an amazing feeling. Especially if you have worried, fretted and stressed about your debts – then it makes that last and final payment that much more rewarding. Remember, getting into debt and feeling the pain of it in all aspects of our lives and emotions is not something that is new to us! We were in $100K of consumer debt – imagine the pain.

Now while being in debt is not a new thing for us, getting out of debt is not either. We did get it paid off with diligence and planning. We are going to now challenge you to get your debt payoff planning done! The next two-days are designed to help you get those plans made.

So…. Be Intentional Challenge #21 :

Create Your Debt Overview and Calculate Annual Interest and More

This might be scary, this might seem unneccesary, this might be hard to sit down and actually do! But, it is important to do. It is first important to realize the reality of your debt situation. We found that by calculating the high level view of what our interest rates were, how long they would take us to pay off at the minimum and the interest or “stupid tax” we are paying each year! I mean, we were talking luxurious vacations, nice household remodeling, etc. that we were throwing down the drain each year.

To start this one, I want to tell a little true story of an experience that I recently had…….

One recent day….I was at Target. I was there with my 5 kids feeling tired and exhausted and lugging around my coupon binder which was like child #6. We had been at Target for 1.5 hours. I had a very full cart, kids whining and I was finally ready to checkout. I picked a short lane.

In front of me in line, I noticed this young gal. Beautiful, fit and dressed very well and very professionally. She had designer everything, her hair was perfect, her makeup was supreme, she wore nice jewelry and it was obvious to me that she had no children.

Photo Credit: YourFunFamily.com

Here I was behind her feeling frumpy, makeup barely on and mascara probably running, hair frazzled and my “one step up from housewife to grocery shopping clothing” on and 5 kids getting very impatient, whinny, cranky, hungry and tired – with my giant coupon binder laying open and my big stack of coupons. I felt pretty miserable and under privileged at that moment because I was comparing myself with her even though I didn’t know anything about her. She smiled at me and my kids and said that they were so cute.

I imagined that she was rich, had her life in total order, successful, available and pretty much everything that I wasn’t at that moment.

Then it was her turn to check out. She had three items – a birthday card, a gift bag and a pack of gum. Again another reason I felt silly with this over-flowing cart of just about everything as I needed to get everything and not just run to the store when I wanted.

Her total came to $8.58 – less than $10 (I was also thinking, sheesh – I wouldn’t buy a birthday card and bag for $8 – I got to get the gift for that amount!)

Photo Credit: maxxcardservices.com

Then it happened. She handed the checker her credit card. It was declined. I all of the sudden went into my state of imagining the glamorous life this woman had to dropping quickly down in expectations. She handed the checker a second card – declined again. At that point, I couldn’t look at her. I knew how she felt and I didn’t want her to know that I knew how she felt and make her feel worse. I pretended to not notice and “be distracted” with my kids – but I was watching her. She stood there – she indiscreetly asked the cashier to return the gum. The total dropped to just under $7. She asked the cashier to run one of the cards again. Still declined. She then searched her wallet and found a third card. I was just about sick to my stomach with anticipation – declined!

At this point…I wanted to just pay for her order so that she could be spared more embarrassment – but I could tell that she didn’t want me to even know as I continued to pretend to not pay attention. She rummaged through her “designer” purse. She found a Target gift card – it had a $5 balance. She only had less than $2 to go. She paid for the rest with nickels and dimes and she quickly grabbed her now two things and walked away.

I stood there stunned – I felt richer than ever even with how I felt I looked, even with my giant stack of coupons and my tight budget. I haven’t had that type of stress financially in a long time.

In fact, the last time I remember any sort of concern or experience like that…. I too was young, well dress paralegal working in a high class law office, no kids, married to a husband that was an engineer. The world looks at that as we shouldn’t have money problems – but in fact, it was the worst financial times of our lives.

I may not look like I have much now, but the fact that I am debt-free, pay for things with cash, have a savings for once in our lives and have not had money worries in several years really does make me realize how richly blessed I am and that you cannot judge a book by it’s cover – or a person by their clothing.

I wanted to share this story with you because once you realize the reality of the debt situation you are in, you will not be successful in getting it paid off. Perhaps if this gal at Target had REALLY known about her situation, she wouldn’t have been caught in such an embarrassing circumstance. But, I half imagine that she was much like Alex and I were many years ago – if we ignored it or pretended it wasn’t that bad, it wouldn’t be that bad. Well, reality doesn’t pretend. Not only did I experience that situation as this gal many years ago, but EVERYTIME I pulled out my cards whether for $2 or $200, I held my breath and my heart rate increased as I waited for the transaction to go through. It was the most miserable and often the most embarrassing feeling!

So are you ready to get rid of your debts? Remember, you most likely didn’t get into debt overnight, so you will not get out overnight – but we are here to walk you through it!

So for this challenge, print off this download and fill-it out. This will give you the high level view of the reality of your debts.

Here’s how to fill-it out:

List the debts on each individual line and start with name of lender and payment in first column
Then list your interest rate on that particular debt
Then fill-in your balance
Then write whether your payment is adjusted or fixed (meaning that if you pay down on this debt, your payment is also less, or is your payment always the same no matter the balance. Credit cards are usually adjusted and things like car loans are fixed as examples.)

Next, you can use this handy dandy debt-calculator to fill-in the Annual Interest and the Estimated Payoff Date columns.

Let’s take our first example on the sheet:

It’s the Visa Credit Card #1 with a 17.9% interest rate, balance of $5,400 and a $101 payment (adjustable, but that is the current payment).

So enter those factors into this calculator and then click on “calculate”:

Then once you hit calculate, you will get your facts:

So then you can fill in your payoff date with using the months or years. And now you can figure your annual interest. You see the total interest that you will be paying at this point is $5,494.68. Here’s how to calculate your annual interest.

Take the months divided by 12 – in this case 108/12 = 9 (this happen to be exact, but most will be like 3.5 years or something)
Then take the total interest and divide by your previous answer, in this case $5494.68/9 (or the amount divided by 3.5 or whatever the answer above ends up being) = $610.52 and round to the nearest dollar so $611 is the annual interest on this debt!
After you have all of the annual interest calculated, for another “fun” step, you can add up the total in interest you pay each year. YIKES!

Once you have done that for all of your debts, then you are done with this challenge and be watching for the next part 🙂

Here’s the things you need:

<== Download your printable Full Debt Overview Form HERE

You can do your calculations on this calculator right here! When entering the factors, don’t include commas or dollar signs or other symbols. On the interest rate, you can include the decimal, but that is it – otherwise it won’t work!

(if you are reading this post in our email or rss feed, you will need to read it on the site HERE to use the calculator)

[debtcalculator legend=”Your Debt Snapshot”]

One final thing….. we also have a Facebook Group where you can engage in discussions, receive encouragement and talk to others that are participating in the challenges too for more ideas! Head to the Be Intentional with The Thrifty Couple Facebook Page HERE and ask to join us there! You can also invite friends and spouses too!

Create Your Debt Overview and Calculate Annual Interest and More

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