Friday, April 27, 2007

Covering my Assets

Just the other week, the IRS financially devastated me. It’s somewhat my own fault since I miscalculated my estimated taxes as a self-employed individual. But that’s beside the point. With this “fresh start” of sorts, I’ve really begun taking a close look at my financial situation. And it’s not that pretty. I’ve found a number of useful sites, blogs, articles, tips, etc that I’ll be passing on over the next few weeks.

Check out my first plan of attack after the jump.

While my coffers have been virtually eliminated, sadly my debt hasn’t. Right now I have 5 cards that all have at least a $1000 balance on each one. Not one card has a minimum payment of over $100. But I pay $100/month on each card. Now this is making a dent in each one, but not by much. So here’s my new plan of attack.

1. I’m paying $500/month total. So I ranked my cards from lowest to highest balance. Now for the four cards with the highest balances, I’m only paying the minimum payment.

2. That all said and done, I’m left with $300-something. I take this amount and apply it to the card with the lowest balance – making a nice dent in the balance.

3. I’m going to keep doing this until that card is paid off. That should take about four months. When that card is paid off, I keep paying $500/month, sticking to the same system, but applying it to the remaining four cards.

4. Do this so on and so forth till the cards are paid off. The system takes a little time, but I think it’s more effective than little payments over a much longer time.

I wish I could remember where I say this strategy so I could pass on the link, but it skips my mind right now. If I can find it, I’ll definitely pass it on. That’s all I’ve got on finances right now. More to come for sure.

(Photo: Pandarine)