Your Questions About Debt-free America

Sharon asks…

What’s the best debt settlement company out there?

I just want to know if anyone out there has tried this for their debt and just wondering if there are recommendations for legitimate companies out there. Thanks!

John answers:

Please do not consolidate. It is not free, they will lower your payments by increasing the length of time until you are debt free, and you will take a hit on your credit score. Or they negotiate your debt down after telling you not to pay for awhile adding another hit to your credit score. There is a better way.

A. Have a garage sale and sell anything that you no longer need or want.

B.Get a temporary part time job, if you have one, get another.

Here is a plan that can help you. If you work the plan, the plan will work for you:
1. Make a budget. Make the budget a week before you get paid. A budget is not a punishment! It is a tool which will free you from ever having to worry about money again. Put everything in your budget. Especially those annual, biannual, or quarterly bills like car registration, insurance, etc. Give every dollar you are going to bring home the name of where it is going. Add an “emergency fund” category to your budget for 25 dollars and save up until you have 1000-1250 dollars. Your emergency fund will help keep you from getting into new debt because of an emergency. If you can, set up a direct transfer to a savings account for your emergency fund. That way it moves automatically and you don’t even have to worry about it. You must cut your spending and live on less than you make.

2.First get current on all of you debts and make no more late payments. Stop using your credit cards immediately. Do not take on any more debt. Credit cards are like quicksand only the death is much slower. Make a list of all of your debts in order of highest interest rate to lowest interest. Use cash only for your spending from now on.

3.Pay the minimum due on all of your debts and then put your extra money towards paying off the highest interest one first. After you get that one paid off, you put the money you were paying on debt #1 (the minimum payment and the extra payment) towards debt #2. That will pay debt #2 off faster. When that is paid off, you put all three payments towards card #3 and that one will be paid off pretty quickly. As an example:

To start :
Debt #1 (highest interest): minimum payment+ extra payment
Debt #2 (middle interest): minimum payment
Debt #3(lowest interest): minimum payment

Debt #1: paid off
Debt #2: minimum payment from Debt #1+ Minimum payment from Debt #2 +extra payment
Debt #3: minimum payment

Debt #1: paid off
Debt #2: paid off
Debt #3:Minimum payment from card #1+ minimum payment from Debt #2+ minimum payment from Debt #3+ extra payment.

That way, you will get them all paid off, on time, and pay the least interest. It will also help towards rebuilding your credit since you will no longer have any late payments. This works no matter how many different debts you may have.

4. After you get all of your debts paid off, add to your emergency fund until you have 6-12 months of income saved up. Put that emergency fund money into a liquid money market fund or into a Bank of America no-risk CD so that if you need the money you can take it out without penalty.

5a. When you have your emergency fund in place, add a category for “fun” to your budget. Save for a holiday, a vacation, a big screen, or dinners out, whatever goal you want. Remember to enjoy your life.

5b. When you have your emergency fund in place, start saving for your retirement. Join the 401(k) plan at work and contribute the maximum. Your employer probably matches at least part of your contribution so why give up free money? Open a Roth IRA and contribute the maximum on a monthly basis. If you start saving for your retirement now, you will probably retire a millionaire.

5c. When you have your emergency fund in place, start saving for your next car. Only buy cars, or other things that depreciate, with cash. Save up for a nicer car. That way you get the interest instead of paying the interest.

You can do it and it isn’t as hard as you think. Just follow the plan.

Mandy asks…

I have about 35k in NON credit card debt should I file bankruptcy or do debt consolidation?

I make about $20k a year
mostly hospital bills and lots of small things, phone bills stuff like that. This debt is from years ago and my credit has always been so bad that I havent been able to get credit cards. I feel like I have always been bankrupt.

John answers:

Neither. Bankruptcy Law has changed and it is not as easy to bankrupt debts anymore. Not to mention the fact that a bankruptcy will trash your FI CO score for the next 7 years. What keeps most people in debt is the fact that they keep spending more money than they make. They look at the “monthly payments” instead of the total debt loan that they are carrying. People need to stop spending now and concentrate on becoming debt free. Please do not consolidate or use a debt reduction company . It is not free, they will lower your payments by increasing the length of time until you are debt free, and you will take a hit on your credit score. Or they negotiate your debt down after telling you not to pay for awhile adding another hit to your credit score. Student loans are the only debt that can garnish your wages for non payment without taking you to court first. Just list them out on a piece of paper or a spreadsheet and follow the plan. If you work the plan, the plan will work for you.

A. Have a garage sale and sell anything that you no longer need or want.

B.Get a temporary part time job, if you have one, get another.

Here is a plan that can help you. If you work the plan, the plan will work for you:
1. Make a budget. Make the budget a week before you get paid. A budget is not a punishment! It is a tool which will free you from ever having to worry about money again. Put everything in your budget. Especially those annual, biannual, or quarterly bills like car registration, insurance, etc. Give every dollar you are going to bring home the name of where it is going. Add an “emergency fund” category to your budget for 25 dollars and save up until you have 1000-1250 dollars. Your emergency fund will help keep you from getting into new debt because of an emergency. If you can, set up a direct transfer to a savings account for your emergency fund. That way it moves automatically and you don’t even have to worry about it. You must cut your spending and live on less than you make.

2.First get current on all of you debts and make no more late payments. Stop using your credit cards immediately. Do not take on any more debt. Credit cards are like quicksand only the death is much slower. Make a list of all of your debts in order of highest interest rate to lowest interest. Use cash only for your spending from now on.

3.Pay the minimum due on all of your debts and then put your extra money towards paying off the highest interest one first. After you get that one paid off, you put the money you were paying on debt #1 (the minimum payment and the extra payment) towards debt #2. That will pay debt #2 off faster. When that is paid off, you put all three payments towards card #3 and that one will be paid off pretty quickly. As an example:

To start :
Debt #1 (highest interest): minimum payment+ extra payment
Debt #2 (middle interest): minimum payment
Debt #3(lowest interest): minimum payment

Debt #1: paid off
Debt #2: minimum payment from Debt #1+ Minimum payment from Debt #2 +extra payment
Debt #3: minimum payment

Debt #1: paid off
Debt #2: paid off
Debt #3:Minimum payment from card #1+ minimum payment from Debt #2+ minimum payment from Debt #3+ extra payment.

That way, you will get them all paid off, on time, and pay the least interest. It will also help towards rebuilding your credit since you will no longer have any late payments. This works no matter how many different debts you may have.

4. After you get all of your debts paid off, add to your emergency fund until you have 6-12 months of income saved up. Put that emergency fund money into a liquid money market fund or into a Bank of America no-risk CD so that if you need the money you can take it out without penalty.

5a. When you have your emergency fund in place, add a category for “fun” to your budget. Save for a holiday, a vacation, a big screen, or dinners out, whatever goal you want. Remember to enjoy your life.

5b. When you have your emergency fund in place, start saving for your retirement. Join the 401(k) plan at work and contribute the maximum. Your employer probably matches at least part of your contribution so why give up free money? Open a Roth IRA and contribute the maximum on a monthly basis. If you start saving for your retirement now, you will probably retire a millionaire.

5c. When you have your emergency fund in place, start saving for your next car. Only buy cars, or other things that depreciate, with cash. Save up for a nicer car. That way you get the interest instead of paying the interest.

You can do it and it isn’t as hard as you think. Just follow the plan.

John asks…

Where would you start a backpackers hostel with $40,000?

I’ve traveled all over Central America and SE Asia, and I think $40,000 would be enough to get a hostel up and running in some locations (of course no guarantees on long term success). I’m curious to learn of places I haven’t thought of or should give a second thought to- where would you start a hostel with that level of debt-free initial investment?

John answers:

LOOK INTO ONE OF THE CARRIBEAN ISLANDS
Year round great weather would attract the people.

Daniel asks…

When was the last time america was debt free?

I heard that bill clinton made a budget surplus or something, but whenever I search it on the internet, it’s saying the last time was back in the 1830s with President Andrew Jackson, so can someone help me? Thank you SO MUCH!

John answers:

It depends what you mean by out of debt.

During Bill Clinton’s presidency, the yearly budget for the US produced a surplus but the country still had a total national deficit from previous years of spending more than the government took in as revenue.

The last time the country’s total national debt was zero was during Andrew Jackson’s presidency.

Chris asks…

what can be changed to make the government more efficient and run like a business?

The government is in deep debt. Both party’s (especially the left) waste the people’s money on things like welfare, Solyndra, and so forth. Government run institutions (like the Post office and DMV) are broke and inefficient.

On the other hand, businesses must sink or swim based on their choices and ability to please the customer. Businesses must make more money than they spend and waste.

Obviously, if America was run like a business rather than like a credit card scam, wouldn’t America be better off.

How does the federal reserve play into this madness ?

John answers:

Any economist will tell you that a “debt based” economy has a severely imparred growth because of its debt.

The privately owned Fed, does run its business as a profit based concern, so much so that it keeps its profits of its shareholders the deepest secret.

Americans didnt care so long as they were doing well personally.

However, now that America no longer actually produces anything theres no growth to offset the severe debt thats owed to the Fed.

A whole bunch of ex-Presidents have told us that, alas agents of Natham Rothschild on Capital Hill promoted the “Foreign Bank”, the “Fed” to us, have begged, blackmailed and bullied its promotion.

The Feds covulsive money supply to the US, continues it profit levels by tradeing on this fluctuation, whilst recieving America’s Tax Dollars in national debt reypayments.

An intollerable situation, that must change soon, before the Fed turns the US into a simular state Greece is in now.

There are many papers and attempts at running a debt free, unfortunately the Rothschilds fractional banking systems have always stiffled debt free economy.

I wonder why?

SACK THE FED TODAY.

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