#MoneyMasterClass Recap-Week 36

This week started a new month and a new topic! It looks like September will be about debt repayment. This week we started looking closely at our debt.

#MoneyMasterClass If you’re holding yourself to a standard you can’t possibly meet, you’re setting yourself up to feel less successful, less proficient, less worthy. Stop it!
— Gail Vaz-Oxlade (@GailVazOxlade) August 31, 2020

#MoneyMasterClass Everything we’re good at — really good at — came to be because we made a wholehellova lot of mistakes. And we learned. And we got better. Sometimes good enough is good enough and you have to learn to let go of that burning desire to make it perfect.
— Gail Vaz-Oxlade (@GailVazOxlade) August 31, 2020

September, dismember (hurricanes). And time to make your #MoneyMasterClass donation to a food bank or women’s shelter. You’re gonna work your ass off this month. GETTING REAL.
— Gail Vaz-Oxlade (@GailVazOxlade) September 1, 2020

Dealing With Our Debt

For this task, the Debt Repayment Worksheet is needed. It is a pre-formulated excel spreadsheet that will allow you to easily calculate how long your debt will take to pay off.

Find the Debt Repayment Worksheet here: MoneyProblems.ca

#MoneyMasterClass Hello September! Lots of changes in the world. Lots of stress. Your life is just about to become easier because you're going to finally DEAL WITH YOUR DEBT.
— Gail Vaz-Oxlade (@GailVazOxlade) September 1, 2020

#MoneyMasterClass First, go to https://t.co/6VrWwXTuES and download the Debt Repayment Worksheet.
— Gail Vaz-Oxlade (@GailVazOxlade) September 1, 2020

#MoneyMasterClass On the worksheet list who you owe money to, how much you owe (total outstanding), interest rate and required minimum payment for each of your debts. pic.twitter.com/AaOelrGSvf
— Gail Vaz-Oxlade (@GailVazOxlade) September 1, 2020

#MoneyMasterClass Don't leave anything off the list: pay advance, buy-now-pay-later, CCs, consolidation loans, student loans, overdraft (if you're in it), car loans, PLC and HELC, back taxes, home buyer's plan, family.
— Gail Vaz-Oxlade (@GailVazOxlade) September 1, 2020

The Debt Repayment Worksheet has spots for:
– Your creditor (ie. credit cards, line of credit, money owed to family–include everything)
– The amount that you owe for each specific debt
– The interest rate for each debt
– The minimum payment you are paying for the debt

The remaining sections will calculate automatically:
– The number of months it will take to pay off the debt
– How much interest you will pay by the time the debt is paid
– The cost of interest per month
– The principle amount divided by 36 months, so the minimum amount to be debt free in three years
– The total repayment needed to cover interest and principle

	Amount	Interest	Minimum	Months	Interest	Mthly		Total Monthly
Creditor	Owed	Rate	Payment	to payoff	Cost	Int Cost	Principal*	Repayment

Credit Card #1	$1,500.00	21.00%	20.00	-240	-$6,300.00	$26.25	$41.67	$67.92

Sample Debt Repayment Worksheet section

#MoneyMasterClass Look at the bottom of the Monthly Interest Cost column. That's what your debt has been costing you monthly. Surprised? Shocked? Gobsmacked? Ready to do something about it?
— Gail Vaz-Oxlade (@GailVazOxlade) September 1, 2020

Small Pieces

If you’ve taken the time to input all of your debt into the worksheet, it could feel like A LOT. This is hard work, but having everything laid out in front of our eyes is such a valuable thing. It allows a realistic picture of what needs to be done.

#MoneyMasterClass If you stomach is flipping, take a breath. What you're doing today is HARD. Don't panic. And don't stall.
— Gail Vaz-Oxlade (@GailVazOxlade) September 1, 2020

#MoneyMasterClass Looking at your debt in small pieces makes it easier to deny what you're doing. Adding up what you owe and what you're paying in interest is where you see the truth.
— Gail Vaz-Oxlade (@GailVazOxlade) September 1, 2020

Minimum Payments

If you’re like me at all, your eyes might go cross-eyed at all the numbers in Gail’s tweets for this section, but don’t lose sight of the main concept.

Knowing your required minimum payment to get out of debt means considering the interest cost as well as the amount of debt.

The Debt Repayment Worksheet can be used to your advantage here. It allows you to play with the repayment amounts and allows you to see the length of time it will take to get out of debt.

#MoneyMasterClass If you multiply your required minimum total by 12 you'll likely see why getting out of debt is so hard. And that's just the minimums!
— Gail Vaz-Oxlade (@GailVazOxlade) September 1, 2020

#MoneyMasterClass What % of your take-home pay are you spending in interest? What % are you spending on your minimum payments? THESE ARE NOT RHETORICAL QUESTIONS. Do the math!
— Gail Vaz-Oxlade (@GailVazOxlade) September 1, 2020

#MoneyMasterClass Time to calculate your actual repayment amounts to get out of debt. Breathe. Subtract the total interest you pay monthly from your total minimum payments. This is what you ACTUALLY REPAID.
— Gail Vaz-Oxlade (@GailVazOxlade) September 2, 2020

#MoneyMasterClass So if your total minimum pmts add up to $1475 and your monthly interest costs totalled $740.62, your ACTUAL repayment is $1475 – $740.62 = $734.38.
— Gail Vaz-Oxlade (@GailVazOxlade) September 2, 2020

#MoneyMasterClass Now the the total amount of your debt and divide by your ACTUAL repayment amount to see how many months it'll take to get to debt free. So if your total owed was $46,735, and you divided by $691, it'd take 68 months to get to debt free.
— Gail Vaz-Oxlade (@GailVazOxlade) September 2, 2020

#MoneyMasterClass It'll also cost you over $52K in interest. Wow! You, of course, can reduce the cost by paying the debt off faster.
— Gail Vaz-Oxlade (@GailVazOxlade) September 2, 2020

#MoneyMasterClass Sadly more people focus on the minimum payment than on actually getting their debt paid off, which is why lenders are so profitable. How do you feel about being the cash cow on which bank profits are built?
— Gail Vaz-Oxlade (@GailVazOxlade) September 2, 2020

Credit Cards

Next Gail asked us to put away our credit cards–whether freezing them or cutting them up. If you’re committed to this task, it is also important to delete any credit card information from online stores if you’ve saved it.

#MoneyMasterClass If you're serious about becoming debt free you can do it. But it won't work if you pay off $300 on your CC and then turn around and rack up another $250 in charges. You've got to put away those CC. Right now.
— Gail Vaz-Oxlade (@GailVazOxlade) September 2, 2020

#MoneyMasterClass Today, find a safe place to store your cards: somewhere it's hard to get at 'em. Freeze them. Bury them. Cut up the card so you can't use it (but don't try to close the account).
— Gail Vaz-Oxlade (@GailVazOxlade) September 2, 2020

How much do you need to pay?

Next it’s time to decide how long you want to be in debt. There are a few things to consider as you look at this choice:

Your budget–how much can you afford to pay towards your debt
How long you want to be in debt/how fast you want to pay it off
Debt fatigue–Gail will be touching on this topic later, but there comes a point where being in debt becomes overwhelming and paying it off feels futile

#MoneyMasterClass It's time to figure out how much money you need to be paying each month to get the hell out of debt.
— Gail Vaz-Oxlade (@GailVazOxlade) September 3, 2020

#MoneyMasterClass Look at the first item on your Debt Repayment Worksheet. How quickly do you want the debt gone? 1 year? 3 years? Let's say you owe $2700 @ 18% and you want the balance to be 0 in 24 months.
— Gail Vaz-Oxlade (@GailVazOxlade) September 3, 2020

#MoneyMasterClass $2700 ÷ 24 months = $112.50 (it's a little less because of the decline balance, but we'll skip that for now, k?) Now add the monthly interest of $40.50 (2700 * 18% / 12) and you'll need to repay $153/month to hit your goal.
— Gail Vaz-Oxlade (@GailVazOxlade) September 3, 2020

#MoneyMasterClass Now do that for every single debt you have on your Debt Repayment Worksheet. You won't have to do it for car payments or instalment loans, just everything else for now.
— Gail Vaz-Oxlade (@GailVazOxlade) September 3, 2020

#MoneyMasterClass Look at what your total monthly payments will be. If you look at the total and say, "There's just no way," it's time to go back and extend your repayment schedules. But be careful of debt fatigue. More about this next week.
— Gail Vaz-Oxlade (@GailVazOxlade) September 3, 2020

Time to “Do Differently”

#MoneyMasterClass If something isn’t working for you, instead of banging your head against that wall, take a step back. Look hard: why isn’t it working? What do you have to DO DIFFERENTLY to make the outcome different?
— Gail Vaz-Oxlade (@GailVazOxlade) September 4, 2020

#MoneyMasterClass If you can’t see it what the humbug is that's getting in your way, ask one of your friends. Pick a sensible / supportive one. Then take their advice. Sometimes you are so close to a thing you have no perspective, so you have to borrow some.
— Gail Vaz-Oxlade (@GailVazOxlade) September 4, 2020

With hard work and determination, being debt free is possible. Here’s a little bit of inspiration from one of Gail’s followers:

You! You are my hero today. Well done. #MoneyMasterClass peeps, take note. https://t.co/PxoGYQnywi
— Gail Vaz-Oxlade (@GailVazOxlade) September 4, 2020

How are you feeling after looking at your debt in such detail?

New to the Money Master Class? There’s still time to get started!
Check out this Twitter Archive to see all of Gail Vaz-Oxlade’s #MoneyMasterClass tweets from the start.
Find the resources, spreadsheets, and quizzes here: Money Master Class
Check out my weekly recaps to get caught up.
Start here with the Money Master Class Intro and Week One Recap

Check out Gail Vaz Oxlade’s books here:*

Money Rules
Debt Free Forever
CEO of Everything
Money Smart Kids