Profit & Loss | Banc Smartz

When A – B = –C

You’ve read this book. You’re eager to try the system. But maybe you’re just $200 shy of making it work. You’re waiting for your next check so you can pay off last month’s bill. You’re always behind, every month.

Start by creating income statements to highlight your weekly net balance. Identify which weeks are leaving you in the negative.

Now we call in the big guns: your bank. Your bank is there to help you. Tell them you’re reorganizing your bills and you need to move payments from this period to this period to realign your income and excess money so you have the ability to pay your other bills. Most banks can make adjustments to fit your plan.

It helps if you show them your situation:

This is the way I get paid;
I have this much money every week;
My bills are stacked like this.

If you show them, they’ll see if you have the money to meet your bills if they move their due date by a week or two—and you’ll incur fewer fees.

Negative Net

To cut payments to credit card debt and revolving loans:

Pay off smaller loans first to free cash from those payments that can be applied to remaining debt;
Prioritize paying off accounts with the highest interest rates.
Switch to 0% offer credit cards, but watch for high transfer fees.
Normally, I do not like to see people jumping around from credit card to credit card, but if you have the chance to go to a 0% card, do it.

Freeing Up Cash from Revolving Debt

Paying off the least of your debts can free up the cash you need to chip away at the largest cards.

Credit Cards/Loans:

Electronics Super Store $1,000 @ 18.00%; min. pmt. $25/mo.
Visa $1,500 @ 0%; min. pmt. $15/mo.
Bank Line of Credit $300 @ 19.00%; min. pmt $35/mo.
Department Store Card $575 @ 21.00%; min. pmt $25/mo.

Which one should we target? Paying off the Bank Line of Credit will allow you to make a relatively small investment ($300) to make that high payment of $35 available to apply to the Department Store Card. Once the Department Store Card is paid off, apply both monthly payments to the Electronics Super Store.

Watch those 0% offers, though. Sometimes they’re only valid for 6 months, then a very high rate kicks in. You’re particularly vulnerable to excess rates if you’re late on your payment.

Where do we get the $300 to pay off the line of credit? Get more money—sell something or get a part-time job—to eliminate this first loan quickly.

You can use Bank Rate’s handy debt calculator to figure out your own scenario.

Spend less. Take a look at your spending patterns and cut excesses; apply the savings to your debt.

Money Wisdom: Stimulation Simulation?

The Outstanding Public Debt as of 16 May 2011 at 2:12 PM GMT is:

$14,382,823,810,293

Each United States citizen’s share of this debt is $46,190.

— U.S. National Debt Clock

Our country has a huge deficit.

Consider the average family’s annual overdraft fees at $360-$400.

The U.S. Census estimates 114,825,428 households in the U.S. as of 2010.

114,825,428 households X $300/household = $34,447,628,400

We could give back $34,447,628,400 each year to our nation’s families simply by creating a plan that eliminates the overdraft fees that they pay. Sounds like a mini-economic stimulus package to me—without spending a dime of taxpayers’ money.