Get out of Debt SIX Video Course (video 4 of 6) : Understanding Your Cash Flow
This video, the fourth in a series designed to help viewers manage their finances and escape debt, focuses on creating a detailed inventory of all debts. The goal is to lay a foundation for an optimized debt repayment strategy by understanding the specifics of each debt, including amounts, interest rates, monthly payments, and payoff dates.
In the video, viewers are guided through the process of listing all their debts, such as mortgages, car loans, and credit card balances. This task involves documenting key details like the original loan amounts, monthly payments, interest rates, and expected payoff dates. For example, for a mortgage taken out at $400,000 with a monthly payment of $3,000 and an interest rate of 8% over 30 years, the video demonstrates how to record this information effectively in a spreadsheet.
The video also addresses the complexities of credit card debts, which differ from fixed loans like mortgages and car loans because they typically only require minimum payments. This can extend the payoff period significantly if only minimum payments are made. The presenter provides tools and methods to calculate the actual time and cost of paying off credit card debt when only making minimum payments.
By organizing all debt information, viewers can see the total picture of what they owe. This step is crucial for the subsequent videos in the series, which will focus on strategies for accelerating debt repayment. The presenter emphasizes that having a comprehensive view of all debts allows for better financial planning and can lead to more effective and faster debt reduction.
