Paying off debt and saving for the RV

posted in: Life Details, Planning | 0

So….René and I do a lot of YouTube watching, the majority being Full Time RVer’s. We learn a lot about the lifestyle by watching different people in different RV’s. Not only about where they travel, but how they earn an income, and how they handle debt. It’s a bit like drinking from a fire hose – there is A LOT of information out there, and determining what information applies to us is the key. We plan on doing our own video about the people we watch at some point, but for now I wanted to write a blog about how we are planning to meet our goals and make this “RV” a reality.

First, we know one thing for sure; we want to purchase the RV with cash – no loans or monthly payments. This would also apply to the truck. If we end up with the 5th wheel, we will need a bigger truck since my current RAM 1500 would not pull the size 5th wheel we would want. There will be enough monetary obligations (gas, campgrounds, insurance, etc) without having to worry about an RV and truck payment.

Currently, my methods of paying debt have worked well enough that I now have ZERO debt on credit cards. The only real debt is my truck and mortgage. The truck should be paid off by the time we’re purchasing the RV, so the truck will become an asset which will be put towards the new truck.

I can recommend two steps used in combination to pay off debt – and I recommend them 100% from experience. I’ve tried so many different methods, spreadsheets, etc. while steering clear of the internet scams.  In the end, there is really only ONE realization – there is no silver bullet and it takes dedication to dig yourself out of debt. The more you want it, the quicker you will see success.

Step one may seem like a no-brainer, but too many people gloss over this step. It’s not possible to get your income/expenses in order, without first:

Truly understanding where your money goes – Step 1

Many people (like my previous self) *think* they understand this. You look at your bank account and bump it up against your bills. Do I have enough to pay this bill? Yep – so pay it. No? Put some aside, and wait for the next paycheck. This kind of process creates, or at a minimum contributes to the paycheck-to-paycheck cycle. The goal here is to never have to ask “Do I have enough to pay this bill?” – what I needed was a tool. Something more than a spreadsheet. And certainly not the “envelope method” – which is where you actually have a bunch of physical envelopes that you put cash in, to dedicate to each budget or bill. It’s actually a great idea, but having cash lying around in envelopes doesn’t sit well with me, nor does routinely divvying up paper money.

My solution, and what I recommend to conquer step one is, YNAB (You need a budget). Full disclosure – I am not a YNAB affiliate and do not get a cent for recommending this tool. I have never encountered a program that is so beneficial for helping you understand your money, and where it goes. It’s not expensive, and worth every penny if you take the time to learn how it works and actually use it. They have terrific videos and a community to help get you started. WARNING: If you skip the videos and dive right in, you will quickly become frustrated – you need to understand the methodology and “rules” of how this system works. There are 4 basic rules, which you can read about here: The YNAB Method and Rules.

I won’t go into how it works in detail in this blog, but in short, it creates a buffer between you and your bank account. Each dollar you earn you assign to a “job” – a budget. Perhaps that dollar goes to paying the electric bill, or towards a credit card – as long as you give each dollar a job the system will work for you. Since you can use it on your computer or mobile device, you will always know how much money you have set aside for groceries or gas – or anything for that matter. You are able to deduct that $40 you just pumped for gas from your “fuel budget” right at the gas station. It let’s you understand what money you have, and what it’s for – instead of just seeing a bank account balance.

Personally, I swear by this software and will never be without it. It’s not only great as a tool to become debt-free, but also ongoing money management.

Attack your debt like you mean it! – Step 2

Now that you understand your money, the debt should be in your cross-hairs. Many people say to pay off high interest loans/credit cards first. Others say consolidate your debt into a low-interest loan. The opinions are endless so I will tell you what worked for me.

You may have heard of the snowball, or cascade method. For me, this was the most common sense approach, but again I wanted a tool. There are complicated spreadsheets you can download, some for free. There are programs that sell for hundreds, but are full of fluff – and at the root of those programs are the snowball method. I know this, because I paid close to $300 for one. It was full of fluff advise on how to sell your used stuff on eBay, refinance your car to save money, etc. All good advice. There were hours of DVD’s to watch, and a binder of papers with formulas, advice, and instruction. In the end, that entire program was summed up with one piece of paper. It was a manual way to write down your debt, minimum payments, etc, and manually calculate what you should pay each month for each debt, resulting in the approximate date you would be debt free.

Wow! This was cool. It really worked. The only thing that sucked about it was it was a manual process. If your debt circumstances changed, you needed to redo the entire process. Plus, I found a calculation error in their process.

Being a web developer, I wanted to make a website that did all this for me. So I did. It worked so well I actually started selling the service. It didn’t take long for me to realized there are so many debt payoff systems in existence, it makes the competition for pay-per-click (PPC) marketing too expensive and distracted me from my other ventures. So I decided to make my debt program free, and give it away as a bonus or value-add for users. If people like it, they can donate if they want to. It’s free now so no harm in trying it.

The website is called Debt Payoff Program PDQ, and you can find it here: https://debtpayoffprogram.com/

After creating an account, you simply enter your debt, click a button and it will show you when you will be debt free. Click another button, and it will generate a custom plan for you on how to make payments on your debt to make that debt-free date a reality. The best thing about it (IMHO) is you can experiment with different numbers to see just how quickly your debt can be paid off. Then run with the plan that works for you!

Again, this is what worked for me. I believe the above information can work for anyone in debt. Don’t take my word for it, give it a try – it’s free! Whichever method you choose, I wish you luck in your efforts to becoming debt-free!

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