Okay so when you say I want to be debt-free what do you mean? Does that mean you don’t have any credit cards? Does it mean you don’t have any credit cards nor car payments? Does it mean you don’t have any credit cards, car payments, nor house payments? I am learning through my business that this term is willy-nilly all over the board, it means different things to different people. The official Debt-Free position is to have no outstanding loans, no matter what type, be it “necessary” or not. So people say, well we have to have a house and we have to have a car to drive to work so that isn’t really debt. Wrong. When I am working with clients, and a goal is set to become Debt-Free, that isn’t sort of kinda, it is all the way free of debt. I have a nifty little worksheet that I have and it calculates the cash flow applied to highest interest rate debt (calculating and subtracting interest paid) until paid off then goes to the next one adding the paid off debt to cash flow, etc. It is pretty cool to see exactly where you stand and how long it will take. Of course things change, salary changes, family situations change over the years, but it helps to see a benchmark when each debt is paid off and the snowball affect it creates to payoff the next one faster. This also helps in making financial goals. So remember Debt-Free means free of any debt. I have a client that can be debt-free within 7 years and another to be debt-free in 15 years. For me, it is hard to say, depending on timing of some investments coming back to us and when, my debt-free plan ranges from 4-15 years. Of course all that can change but it is a stick in the sand to start working towards, it feels attainable. Do you know when you will be debt-free? Let me know if you need some help calculating, I know I am a total numbers geek.


~ by debt2dreams on January 2, 2009.

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