Managing Debt the Jude Offiah Way
OKLAHOMA CITY, OK / ACCESSWIRE / March 5, 2021 /Debt is a four-letter word to many and in some cases, that four-letter word is a necessary evil when it comes to business financial management. Debt can slowly erode the fortunes of a business over time according to noted financial advisor Jude Offiah.
Eliminating Debt can ease the pressure off of Accounts Payable and allocate more funds towards purchasing items or services to improve business operations. We will look at the two most-cited ways to eliminate debt as quickly as possible to free up the check register.
The Tidal Wave Method
This is the most popular way to wipe out debt expediently, and it involves a little know-how of your financial picture. The Tidal Wave involves listing out all the company's debts and list the current balances, interest rates, and a rough estimate of when the debt will be fully paid up under normal payment schedules. Jude Offiah suggests in this method to list the smallest balance first, regardless of the interest rate.
Then you would list the next smallest debt and so on and so forth, you should have a full list of debts from the smallest balance to the largest balance. The next step in the process is to look at the company budget from month to month. Is there a surplus at the end of each month after all expenditures are made?
This is all assuming that the company is just making the minimum payment on each debt month-to-month. Once this surplus figure is known, halve that number and that number will be the figure you use to pay additional on your first debt in the tidal wave.
Jude Offiah mentions that the business should be paying the minimums on the other debts listed in tandem with making the minimum + additional figure to pay on the first debt. These additional payments may satisfy the first debt after two or three months, then you apply the total amount that you were paying on the first debt to the second debt in the process and so on and so forth.
According to Jude Offiah, the reason that it's called the "tidal wave" method is that it acts similarly to a tidal wave. The wave starts small at the beginning, but after four or five debts have been cleared, the company is paying a huge amount on clearing specific debts near the end of the list every month. This can clear a list of debts in as little as two to three years depending on the amount of money owed.
The Interest Tidal Wave Method
This is a slight alteration to the original tidal wave method as the focus of the list changes when compiling it. Instead of listing debts smallest to largest by balance owed, you list the debts in accordance with their interest rates from highest to smallest. The end result is arguably the same amount of time and roughly the same amount of money saved on interest, although there are always exceptions to this rule.
Final Thoughts on Jude Offiah's way
These methods can really tackle the debt monster with money already accounted for in the books. The reason that you only take 50% of the monthly surplus to attack the debts is that it's always beneficial to have a little surplus in the bank from month to month for unexpected business situations.
Web Presence, LLC
View source version on accesswire.com:
© 2021 Accesswire. All Rights Reserved.