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Innovative Debt Reduction: Accelerator Margin Program
from:Are you searching for a way to reduce your personal debt? For many people there is a new approach to debt reduction: Accelerator margin programs are being marketed all across the Web, and many financial sites are boasting about the claims of this interesting debt reduction "accelerator." Others have no clue what the "accelerator margin" is, let alone what it has to do with reducing their debt load.
First, it might be help to define the term "accelerator margin." Briefly, this margin is defined as a portion of the debtor's current income which will be set aside specifically for the purposes of debt reduction. Accelerator Margin systems are built up from this basic element. Of course, there are many doubters who say that this system is not feasible. The goal of this article is to explain this new technique in a systematic way, highlighting the primary points while also trying to focus on the fact that this, above all, a reasonable method of debt reduction.
Where Do You Begin?
Are you ready to get serious about debt reduction? Accelerator Margin programs requires a serious commitment of your time and creativity. You will begin by taking time to examine your check register. This amounts to a review that may cover about six months. This examination will be used to target major spending activities and then categorize them accordingly. You will want to list the total amounts as they relate to your spending in each category. Ideally, you should focus on getting both weekly and monthly totals for each of these categories.
Next, you will look at each category individually and calculate a percentage amount that you can cut from each one. Obviously, there will be categories that you cannot touch such as utilities. These are nonnegotiable. Yet, there are others that are fluid. Cable service and the internet are good examples. As you find areas to cut out a percentage, your ultimate goal is to come up with a total estimate of debt reduction. Accelerator margins should be average in each of the reducible categories from your budget. (In order to be effective, the number should be about 10% in total.)
The Application
This is the more complicated step to using this approach to debt reduction. Accelerator Margin programs operate according to certain formulae. First, you will need to locate all of the current bills for debts and create a table or spreadsheet. List the name of the creditor, the total amount you owe, and the monthly payment amount. With this information on hand, you will need to divide the total payment by the monthly payment and write answer in a column for each corresponding debt.
Next, sort them according to priority using numbers or whatever device you desire. For example, using numbers, the order is reverse so that number one is the lowest division answer, while number two is the next lowest and so on.
With each number assigned, you will then make minimum payments starting at number two and working down from there. The Accelerator Margin amount will be used to pay extra one the item listed first on your debt list. As a form of debt reduction, Accelerator Margin is almost identically to the so-called "Snowball debt reduction" method. By paying off the lowest debt first, you will have all that extra money available to place on the next debt on your list, following the same procedure for each subsequent debt until all of them are paid off.
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 Globe and Mail | Fitch Rates United Technologies' Proposed $10B Sr. Unsecured Debt 'A'; Outlook ... MarketWatch (press release) UTC's ratings or Outlook could be negatively affected if leverage is not reduced to a level well below 2.0x within 12-18 months. Risks that could impair free cash flow and delay a reduction in leverage include concerns surrounding Europe, slower growth ... TEXT-Fitch cuts Computer Science's IDR to 'BBB' |
TEXT-Fitch rates United Technologies' proposed debt 'A' - Reuters
TEXT-Fitch rates United Technologies' proposed debt 'A' Reuters UTC's ratings or Outlook could be negatively affected if leverage is not reduced to a level well below 2.0x within 12-18 months. Risks that could impair free cash flow and delay a reduction in leverage include concerns surrounding Europe, slower growth ... Fitch Rates United Technologies' Proposed $10B Sr. Unsecured Debt 'A'; Outlook ... |
TEXT-Fitch rates Covidien's proposed notes 'A' - Reuters
TEXT-Fitch rates Covidien's proposed notes 'A' Reuters SOLID FINANCIAL FLEXBILITY AND LIQUIDITY Covidien's very strong level of cash generation facilitated debt reduction in fiscal 2011. The company generated $1.3 billion of FCF (free cash flow; cash from operations less capital expenditures and dividends) ... |
TEXT-S&P rates Ferrara Candy Co prelim 'B' - Reuters
TEXT-S&P rates Ferrara Candy Co prelim 'B' Reuters However, we believe the company will apply its excess free cash flow towards debt reduction beginning in 2013 as cash flow improves from merger-related synergies. We would consider a downgrade if the company faces operating challenges, which results in ... |
TEXT-S&P assigns Kraft Foods Group prelim 'BBB/A-2' ratings - Reuters
TEXT-S&P assigns Kraft Foods Group prelim 'BBB/A-2' ratings Reuters Given that we expect the company to fund this with annual free cash flow, we have not forecasted debt reduction. -- We expect share repurchases, if any, will be limited to only offset option dilution. -- No acquisitions or increase in pension funding ... |