[caption id="attachment_951" align="aligncenter" width="600" caption="----John's $950 Saturn is $10,000 cheaper than his truck and gets double the gas mileage----"][/caption]
I had lunch with John today. We did a little financial check up on how his debt reduction was going and talked about how we could maximize his efforts to continue his journey out of debt.
I told him how his story (see his full story here) has by far been the most popular thing I’ve written about on this blog.
He was thrilled at potentially giving someone else encouragement in their “journey out of a self-dug hole”. I asked him if i could share details.
“Absolutely.” He said.
Perhaps the coolest thing about his journey is that nothing miraculous or spectacular has happened to him along the way. He’s received no inheritance, hasn’t won the lottery, and hasn’t been given a single penny from Ed McMahon and the fine folks at the Publisher’s Clearinghouse. In fact, the value of his house has gone down $10,000 and he …
Is the amount of debt retired by my friend John over the last 11 months. He just sent me an email to tell me about it, grateful that I helped him put a plan together.
You see, 11 months ago we met and talked about a strategy to reduce his debt.
Here’s what he did:
1. Started an Envelop Budgeting System
First he looked at his income and expenses and decided to put in place an envelope budgeting system so no new debt was created and he knew exactly how much he could put against his debt. Check out Frugal Dad’s article on Envelope Budgeting. When he would have extra money in one of the envelopes, he used it to speed up his debt repayment. As he was doing this he also decided to change his cell phone plan, drop his “landline” telephone service, and look at every other monthly expense to see if it could be reduced or eliminated.
2. Work a Debt-Snowball Method
Next, we carved out extra money that could be put against debt, which would create more monthly money available to destroy debt. This is called the “debt snowball” method. In short as debts are paid …
