Step 2: Eliminate Bad Debts part 3 — Paying Down Debt

As a rule, you will usually pay down your debts with the highest interest first, using three ways:

1. Closed Circle: Establish budget totals to determine your available income to service debt on a monthly basis.
2. Overflow / Abundance – As you close your circle and take control of your finances, you will have overflow that will allow you to get out of debt faster.
3. Debt Reduction Strategies – There are several strategies that can help you get out of debt such as debt consolidation.

Overflow & Abundance part 2

Here are a few more of my insights about overflow and abundance. .

The position we want to be in is where our income is above our closed circle. This puts us in an overflow position, where we are not living “Paycheque to Paycheque”. The overflow can be used for paying down bad debt, investing, planned giving, or in other areas that will help you achieve your goals. Do not spend your overflow foolishly, otherwise it is the same as living in an open circle. It is best to agree before hand on where the overflow will go. Establish a firm closed circle and use your overflow to live in abundance!

I hope I have given you a clear picture on this topic. If you have comments or questions, please just let me know and I will be glad to help you out. I hope to hear from you soon!

Best regards,

Michael Lepitre

Overflow & Abundance part 1

Over the next few days, I’ll be talking a little bit about Overflow & Abundance that comes from a Closed Circle Budget. Please read on . . .

Our Closed Circle answers the very important question “How much is enough?” The closed circle is broken down into 3 categories; obligations, necessities and wants. Once we have determined our closed circle, we now compare it to our income. If our income is less than our closed circle than adjustments need to be made. We either need more inflow of income or we need to decrease items in our closed circle.

- Michael Lepitre

The Closed Circle

It seems today that a lot of people are living in what we call an Open Circle - the more money they make, the more money they spend. And when there’s a drought in life and the economy is bad, many people continue spending like they did before.

A lot of these people do not realize that they’re going into an Open Circle until it is too late. They spend more and get into more debt. Things continue to get worse for them until they are unable to pay their bills. They eventually end up having to consolidate or re-finance to be able to keep up with their debts. Some people even have to go as far as filing for bankruptcy.

Living in a Closed Circle will allow you to know the answer to the question – how much is enough? In a marriage, having a spouse in agreement is always the most important thing. Husbands and wives in disagreement especially on a major issue like finance can cause arguments, stress and even worse, divorce. If we get into the idea of a closed circle and answer the question, how much is enough, spouses can have an agreement on their finances, stick to this agreement and live in abundance and overflow.

Michael Lepitre