Hey everyone and welcome back to Digging
Out of Debt with Lanette and today I’m going to be talking about something that
I refer to as the Debt PINball. If you’re aware of Dave Ramsey’s plan you know
that baby step 2 is pay off all debt and how you do that is through the debt
snowball and how Dave Ramsey explains that is that you take all of your debts
that you are paying monthly on things such as car payments and credit cards
and you list them in order from smallest to largest and while you’re making
minimum payments on everything except the first one you throw everything you
have at the first one until that’s paid off and then you take
what you were paying on that first one you add it to the minimum payment on the
second one and you send that chunk to the second one until that’s paid off and
so you’re snowballing that amount that you’re sending each month is snowballing
until you’re able to pay off all your debts and that is an incredibly awesome
plan assuming that everything every debt that you have is something that you’re
actually making monthly payments on. However, sometimes you don’t have enough
money to be able to be making payments on all of the debts that you have so
sometimes you have to be more strategic about what you go after and I’m not
talking about like you know taking the highest interest credit card and paying
that off first no I’m not talking about that kind of thing I’m talking about
like things that are that are debts that you have to pay you know you have to pay
them but they’re not forcing you to pay those things every month. Sometimes if
you don’t have enough money you have to find the one or two items debt items
that take up the most of your budget and whatever is taking up the most of your
budget that is what needs to be freed up first and that’s why I call it the debt
pinball because if you remember pinball at all I used to love pinball played it
all the time when I was a little kid the hardest targets to get to are the ones
that reap the most points and the most reward
and that’s kind of how we had to approach our budget we had to go over go
after the big things the big things like a car payment the big things like credit
cards those were the things that we had to go after first even though we had
smaller debts like personal debts to family, medical debts left over from
pregnancies, other things like you know when we moved we had some utility bills
that we were on budget for and you know when you move they’ll anything that you
haven’t paid through the budget becomes due and so those were those were not
things that were in our monthly budget so we had to set those things aside. Were
we sent to collections? Absolutely. Did we have to deal with you know collectors?
Yes we did but those things had to wait we just simply didn’t have the money for
them. At our worst we had a used van that we had financed and that had to go
first because it had it was the smaller of the two between the car payment and
the three credit cards that we had the van was definitely the first thing it
was the smaller of the the four debts and so it had to go first but it had to
go so that we could free up money to go after the credit cards which was the
next biggest thing so we went after the car and at the time I was working a
Direct Selling job and I had just started it and we went after it and we
tackled the balance on the used van and we paid it off in six months which was
totally awesome and then that was completely gone from our budget. Then we
decided and I know I know Dave Ramsey says don’t consolidate debt but we were
having we had extreme circumstances and I decided that it was easier for me to
deal with a debt management company than it was for me to deal with three
separate credit-card companies calling me contacting me driving me absolutely
insane and being horrible and so what we did was we went with a company
Trinity debt management it was a Christian based company and they don’t
they’re not like those credit companies where they actually get the amount you
owe reduced they did not reduce the amount that we owe basically what we did
was we we consolidated it all and then Trinity they were the ones who
communicated with our creditors we had one payment automatically withdrawn from
our account every month and that payment was given out to the three credit card
companies that we owed money to and what was interesting I found interesting was
that Trinity debt management kind of does the debt snowball so you’re
paying all three but you’re paying off one first and then you’re paying off a
second and then you’re paying out a third so it’s really interesting how
they do it it’s kind of in line with with the Ramsey plan but we went with
Trinity debt management because we needed to be able to get the creditors
off our backs and at the time with my Direct Selling
job I had gotten to the point where I my income each month was regular enough
that I thought I could handle that payment with just my job because that’s
kind of what we needed to do there wasn’t anything extra you know from
other work from my husband’s job so so I sort of like step of faith but I would
call it a giant leap of faith we consolidated our credit cards with
Trinity debt management and then so we tackled that and that was a five year
plan. $425 a month for five years to pay
off approximately it was around sixteen thousand dollars in credit card debt
and and it was not easy it was so not easy very stressful however through a
series bonuses that I earned with my Direct Selling job
and we actually sold a piece of artwork that we had and some other some other
things just a bonus at the last minute a Christmas bonus with my direct selling
job we were able to actually pay off the sixteen thousand dollars in credit card
through credit card debt through trinity debt management in two and a
half years. So we knocked it out in half the time and that was really awesome
because then we had no car payment and no credit card payment and finally
our budget could get to the place where it would actually balance because we
were functioning in the red for so long I think at our worst we were functioning
$700 a month in the red and some day I’ll tell you about that whole situation
and and how we got there and but the story was we just had to get our budget
to a place where it would balance to zero and not be in the negative and in order
for us to do that we had to take out the car payment and all the credit cards
just to get our income to balance with what needed to go out each month to zero
and during that time period I mean my husband experienced a job change with a
ten thousand dollar pay cut and I wouldn’t change anything about that that
decision that was a great a great decision but yeah the debt pinball means
you go after the strategic things that are going to make the most room in your
budget they’re gonna reap you the most reward in your monthly budget because
you can’t pay off debt to family you know old debts things the collectors
we’re coming after you for and they don’t even bother you about any more but
you know you need to take care of those things you can’t get to those things
when you are just being harassed by monthly bills like car debt and credit
card debt especially that is the worst so the Debt Pinball was just something I
invented thank you can I like copyright that? TM
trademark The Debt Pinball. Sometimes you have to take the Dave Ramsey plan and
you have to make it apply to you. I know that Dave has said something about like
96 or 98 percent it’s a really high number percentage of people who actually
use the Dave Ramsey plan they are out of debt in two to three years so when they
talk about like rice and beans beans and rice and they talk about no vacations
and they talk about you know this that the other thing these are families who
make enough money that once they get their house in order and they have a
budget and they buckle down and they sacrifice for the short period of time
they can be completely debt-free in two or three years that is so far outside
the realm of of my my imagination just because in addition to the debts we’ve
already paid off we still have some of these little debts that medical debts
and utility debts and things like that that we need to take care of we also
have a massive student loan massive massive and that’s another story for
another day but when I think of being out and of
debt in two to three years I would have to make like our household income would
have to be you like two hundred thousand dollars to be able to get out of
everything in two to three years like yeah so you have to take Dave Ramsey’s
plan and if you’re part of that small percentage of people that are not it’s
not going to take two or three years it’s gonna take a while you’ve got to be
sometimes more strategic and and that’s why I came up with The Debt Pinball
because you got to go after those things that are gonna free up in your budget
the things that are gonna make the most difference you got to go after those
things so this was a really super long video and I didn’t intend it for it to
be but I didn’t have a script and I just wanted to sort of put it all out there
what the concept is and let me know in the comments have you in your journey
toward debt freedom had to you know stray from the plan had
to do something a little bit more creative had to you know figure out
something because you know following the plan isn’t gonna work every single time
in every single case and let me know how you finagled how you finagled your way
through a situation let me know I would love to hear it thanks so much for
watching you guys I really do appreciate your time and I look forward to serving
you in the future.