As 2009 is coming to a close and we're closing in on our $1,000,000 mark for debt reduction (KEEP UP THE GREAT WORK PEOPLE!), it's time to start planning for the 2010 debt reduction challenge.
It has become readily apparent that there need to be some definitions of terms for 2010, so there is clarity as to what constitutes actual debt reduction.
To me, "reduction" means it has to already be existing - so for next year, here is what I propose:
Debt
A debt is defined as:
Valid Debts
Qualifying Amounts
This is true of all debts unless the debt has a "prepaid interest" clause, in which case - wow, you poor sod...
What will this mean? It means next year it's going to be a LOT harder to get close to $1,000,000 in reductions. We'll need more people.
Why then am I suggesting this change? - Because it is important for people to REALLY BE AWARE of just how slowly their actual debt is going down. When one counts the interest paid on a mortgage for a year as debt reduction, it gives a false sense of accomplishment. Paying interest doesn't eliminate debt, it only stops new debt from accumulating.
So - those are my proposed terms. This is not a unilateral decision - I think the FV community should consider if these are reasonable terms and then we can decide as a group. (And then I'll just overrule you if I disagree with the decision... KIDDING!!!)
So - please discuss!
It has become readily apparent that there need to be some definitions of terms for 2010, so there is clarity as to what constitutes actual debt reduction.
To me, "reduction" means it has to already be existing - so for next year, here is what I propose:
Debt
A debt is defined as:
- A formal agreement between a borrower and a lender; or
- A balance owed for a transaction which could not be paid for in full at the time of the transaction or within the normal terms of the transaction.
Valid Debts
- Any debt already existing as of January 1, 2010 at 12:01 AM; or
- Any debt accrued in 2010 that has been owing for more than 30 days.
Qualifying Amounts
- Principal reduction ONLY.
This is true of all debts unless the debt has a "prepaid interest" clause, in which case - wow, you poor sod...
What will this mean? It means next year it's going to be a LOT harder to get close to $1,000,000 in reductions. We'll need more people.
Why then am I suggesting this change? - Because it is important for people to REALLY BE AWARE of just how slowly their actual debt is going down. When one counts the interest paid on a mortgage for a year as debt reduction, it gives a false sense of accomplishment. Paying interest doesn't eliminate debt, it only stops new debt from accumulating.
So - those are my proposed terms. This is not a unilateral decision - I think the FV community should consider if these are reasonable terms and then we can decide as a group. (And then I'll just overrule you if I disagree with the decision... KIDDING!!!)
So - please discuss!