You may not know it, but millions of Americans are in dire need of debt management help. Most folks who need debt management guidance are well aware of this fact. Their credit cards are beyond maxed out, they’re incurring late fees on their debts, plus they are getting message or phone calls from bill collectors simply because they have skipped payments on their charge accounts.
But even if you think that your finances are in order, you can still take advantage of debt management assistance, which means you do not end up misusing your credit and find yourself under plenty of debt.
Identify Exactly Where Your Hard Earned Dollars Go
Before you take care of your financial troubles, you have to learn how to handle the money you actually make. This is called managing your cash flow. This can be a painful process, nevertheless, you need to master your cash flow before you go forward to debt management guidance.
Many of us pay our bills once a month, so for one full month, you have to keep a journal of each and every cent spent. Regardless of whether you write a check, make use of debit cards, pay a bill on the web, or pay a bill by an automated deduction, you have got to record it.
At this point, don’t worry about categorizing the income you spend, and do not make an effort to reduce it. The purpose of this exercise is to obtain an accurate picture of where your cash goes, so spend money as you typically would.
Categorize Your Spending
Key in all of your expenditures into an electronic spread sheet program. If you don’t have a Microsoft Office application like Excel, make use of Google Documents, a free on line spreadsheet application.
Utilize spreadsheet software rather than writing onto a paper account ledger to help you sort the columns and learn how much income you may be spending at a particular coffee shop, or sort your expenses from highest to lowest. Doing away with your largest monthly payment, like a 2nd or 3rd car payment might have an important impact on eliminating your debt.
Create one column for each of these factors: Date, payee, amount, purpose, method of payment. Now key in all your spending for the whole month.
Highlight each column using a different color based on whether the expense is essential or discretionary. Money used for a property tax payment, for example, is essential. Money spent for eating out is discretionary.
Cut Your Expenditures!
Starting with the optional items, distinguish items so you can cut that amount to 10% of your spending. You will find that you can readily cut 15% and up from their spending the first time they do this exercise. Do away with coffee drinks, restaurant lunches, ATM service fees, and other optional expenses.
This is a good start, but is only the beginning. Check out my site below to learn the step-by-step process of eliminating 50% or more of your debt. It’s free to sign up. You have nothing to lose!
by Bill Winslow
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Tags: Good Debt vs. Bad Debt
