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Time,Tide, and Bill-Pay Wait For No Man

Time,Tide, and Bill-Pay Wait For No Man

    Bills are the bad guy–your ultimate nemesis.

    At the least, they’re like those annoying second-cousins at family functions you’ve labeled as  “Hoverer” and “Close-talker.” The point is, they’re always there. No escaping. You’re tied to them.

    Because of this inescapable connection, we often let bills consume our thoughts, and—even more valuable—our precious time. We trudge through the same cycle of  worries with each glance towards the fridge and see that bill stuck there staring back, unyielding. You owe me $64, chump! And I want it by the 16th of this month or its overdue!

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    You answer back in your head. I’ll get you the money, I swear! I…I just need a little more time. I don’t get paid ‘til next week. I can’t pay it right this second. I need my paycheck first.

    Add  another three or four bills and after a while you feel like the Mob is after you (or worse, the IRS). Everyone wants your money but you have to coordinate your bills with your paychecks. It usually goes something like this:

    I’ll pay bill 1 on Monday. No. Oh right, I have these other three bills due. Bills 2, 3, and 4 are all due at about the same time. 2 definitely needs to be paid first or it’ll be turned off. Bill 3 I suppose can wait for a bit… I can definitely put that off until… when would I get paid the next time? Where’s my calendar?

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    This. Is. Exhausting.

    Which leads me to my main point. The biggest time drain in money management is trying to time bills to paychecks. Most people spend somewhere between 4-8 hours each month trying to “manage” their finances this way. Luckily, there is a way for you to cut your planning time down by 90% and regain some precious hours of your life.

    The paycheck to paycheck cycle

    First, the root problem needs to be addressed: the paycheck to paycheck cycle—a problem so many deem unavoidable. It is avoidable. The answer is not more money, rather it’s how you time your spending.

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    Create a financial safety zone by slowly building up your funds (I call it your Buffer) so you can live one month behind your earnings…and one month ahead of your bills. Translation: your take home pay from November won’t be used until December. Everything made in December won’t be touched until January, and so on. Savvy?

    Building your Buffer

    Now, how to get there. For most people, it takes about four months to save up and make this spending shift. You have a handful of options as to how to do it: Go on a spending fast—just for one month—then do it again a few months later. Any money saved can be put aside for the Buffer. Work overtime. Sell some stuff. Discontinue a few niceties (again just for a month or two). The point is, once you’ve made the timing change, spending last month’s income this month, you’re there! It’s a sprint, not a marathon.

    Living on the previous month’s earnings will allow you to streamline your bill pay process like never before. Your needed funds will be right there, already earned and ready to go. If you’re on a variable income, the guess-work will be eliminated. Bills can be taken care of in one hour or less. Throw in auto-pay options and you barely have to glance over your bills. No more wasting time on valueless activities: fretting, bill/paycheck coordinating, or stressing. The money is there. You earned it last month. Done and done.

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    Take the time to get out of the paycheck to paycheck cycle and say hello to a world of time….at least a few more hours of it, anyway.

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    Time,Tide, and Bill-Pay Wait For No Man

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    Last Updated on August 21, 2018

    How to Pay off Debt Fast Using the Stack Method (A Step-By-Step Guide)

    How to Pay off Debt Fast Using the Stack Method (A Step-By-Step Guide)

    Whether it’s consumer debt on credit cards, student loans or a mortgage, most people find themselves weighed down by debt at some point in their lives. This can keep us working jobs we hate just to pay the bills and keep our heads above water. By learning how to pay off debt fast you can release this burden and remove some of the stress from your life.

    Today I’m going to show you how to pay off your debt fast using the Stack Method:

    Step 1: Stop creating new debt

    Most people do not receive training in handling money and how to live within their means. If you’re in debt then you’re probably one of these people and it’s time to bite the reality bullet.

    It’s going to be impossible to get out of debt unless you retrain your financial habits right now.

    You must make a stand against all the marketers trying to take your hard earned money or offering easy finance. You don’t need more stuff to make you happy. What you need is financial peace of mind.

    So cut up your credit cards or freeze them. I mean this literally. Put them in a container of water and stash them in your freezer. T

    hen when there’s an opportunity to spend, you have time to thaw out (you and the credit cards) and really decide if you need that purchase.

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    Step 2: Rank your debt by interest rate

    Make a list of all your debt with amounts and the interest rate. The highest interest rate should be at the top as this is what you’ll pay off first.

    Paying off your high interest debt is the key to the Stack Method and paying off debt as fast as possible.

    Interest is a powerful weapon and right now the bank or other financial institutions are using it against you. Interest significantly increases the amount you need to pay back and often we’re completely unaware of how much that is.

    For example, if you have a $10,000 credit card debt at 20% interest where you pay a minimum payment of $200 a month, you will end up taking 9 years and 8 months to pay off the actual amount of $21,680 including $11,680 in interest!

    Step 3: Lower your interest rates

    You can often lower your credit card interest rates by doing a balance transfer. This means moving your credit card to another bank and they will lower the interest rate to get your business.

    Shop around and try to get the lowest interest rate for the longest duration (preferably until it’s paid off completely). Just make sure you’re reading the terms and conditions carefully so you don’t get stung by the new bank in other ways.

    Once you’ve done this you can order your list of debt again if things have changed.

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    Step 4: Create a strategic spending plan

    This is where we improve your financial control from Step 1. Take a piece of paper and write down your income after tax and all the expenses that you have. This will include the minimum payments on all your debt.

    Look at your expenses and then rank them in order of importance to you. Look at the items on the bottom of your list and decide whether you’d rather have them or be financially stable. The objective is to create a Strategic Spending Plan where your expenses are lower than your income.

    You also decide how much you are willing to spend on each area of your life. You can allocate amounts for rent, groceries, eating out, buying clothes and other activities however realize that once you’ve spent your allocated money there’s no dipping into other areas.

    It also helps to have a Fun Account that you can spend on what you like and an Emergencies Account in case your car breaks down etc.

    You also want to include in your Strategic Spending Plan as extra amount you’re going to use to pay off debt.

    Can you afford $20 a week? $50? $100? $200 or more? It’s important that you get a realistic number that you can commit to each week without fail and this is your Stack Repayment.

    Step 5: Create a repayment schedule

    The first part of the Stack Method is to cover the minimum payment on every single debt you have. Any time you miss a payment, you incur fees and these add up quickly. This also includes making the minimum payment on the debt with the highest interest rate.

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    Then for the debt with the highest interest rate (your Target Debt) you’re going to add the Stack Repayment from your Strategic Spending Plan. You apply this Stack Repayment and the minimum payment until that debt is paid off in full.

    As your official minimum payment decreases, you add that extra amount to your Stack Repayment. So as your minimum repayment drops, your Stack Repayment increases equally. This will compound how fast you pay off the Target Debt by adding even more to the repayments you’re making.

    Step 6: Reward your progress

    You want to track your Target Debt so you can see your progress along the way. You can also decide on milestones that you’re going to celebrate and reward yourself on.

    A reward doesn’t have to cost money but if it does then it comes from your previously allocated Strategic Spending Plan.

    This is an important step as it will keep your motivation going when you feel your willpower fading.

    Just like you’ve trained yourself to brush your teeth and shower, you can train yourself to manage your money. Feel great that you’re now entering the 10-,20% of people who are actually responsible with money.

    Step 7: Compound your results

    Once you pay off your Target Debt, you have a huge celebration and congratulate yourself. Then you move the Stack Repayment (which includes the previous minimum payment as well now) to the next debt with the highest interest rate.

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    This becomes the new Target Debt and you are using your Stack Repayment amount plus the minimum payment for the new debt.

    This is why the Stack Method is so powerful. As you decrease a debt you actually increase your Stack Repayment amount. This means the second debt will get paid off even faster, the third even faster than that, and so on and so on until you are completely debt free.

    Step 8: Be kind to yourself

    During this process, your resolve is going to be tested multiple times. Maybe you’ll have an emergency like your car breaking down or the need to travel for a sick relative. The important thing is to not throw up your hands in despair while going back to your old habits.

    Life will test your commitment to your new responsible money attitude and it’s up to you how you respond. When things go wrong (and I guarantee they will) you need to shrug it off and get back on track.

    Show compassion when you accidentally go over your Strategic Spending Plan and decide to do better next week.

    The bottom line

    The Stack Method is a powerful tool but it’s up to you whether you use it.

    If you really want results, then bookmark this article immediately and start working through the steps.

    It’s only by the decision you make right now that you will enjoy a debt free future and live a financially responsible life.

    Featured photo credit: Unsplash via unsplash.com

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