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MONEY
2020 TM
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Method 1 - Reduce total credit card debt by __%
Example: The Anderson family has a total of $3,050 in credit card debt. They are considering reducing that debt load by 20%, or $610 in one year. This will require an extra $12 per week set aside for debt repayment. ( $610 / 52 weeks = $11.73 per week or approximately $50 per month.)
Method 2 - Completely pay off credit card debt within three years.
Example: To pay off $3,050in the next three years, the Anderson family
may divide the dollar amount owed by the number of months until the deadline. Three years will equal 36 payments until the deadline. They will need to pay $85 off the principal each month in addition to the interest on the unpaid balance in order to eliminate this debt by their deadline.
($3050 / 39 months = $84.72 + interest
per month.)
Method 1 - Establish an emergency fund - of at least 2 months of salary. If you do not currently have funds available for unexpected expenses like emergencies, replacements and repairs, this would be an excellent choice to begin your savings plan.
Example: The Anderson family will set aside $2,500 in their emergency fund within 18 months. They need to set aside $138.88 per month or approximately $33 per week to achieve this savings goal.
Method 2 - Save a certain percent of income per year. Most financial planners recommend saving at least 10% of annual income for long term future goals.
Example: The Anderson family decides to save 10% of annual take home income, which for them will be $2500 per year. This amounts to $207 per month or about $48. ($2500 / 52 weeks = $48)
Method 3 - Save for short/ medium term goals - These are savings for specific purchases or expenses that will occur within one to three years.
Example: The Anderson Family wants to save for some goals such as a down
payment for a car and a vacation that they will take in 39 months. Their goals
total $5,000. They need to set aside $ 128.20 per month and they will reach
their goal.
$5000 / 39 months = $128.20 per month.
Method 4 - Set aside two extra paychecks per year when paid bi-weekly. There are twenty-six bi- weekly pay periods in a year. If an individual or family is able to live on 24 checks, or two paychecks per month, the additional two paychecks can be used as savings.
Net Income (take home amount) $ ______________
| Debt Reduction Goal | $ | line 1 |
| Increase Savings Goal | $ | line 2 |
| Total MONEY 2020 TM Goal | $ | Total Lines 1 & 2 |
Most financial planners recommend a total of 3 to 6 months living expenses be held in an emergency fund. If you are just beginning an emergency fund, even one month of savings is a good start.
