I’ve heard it said that debt is like a high sugar diet. A little bit can be okay, but too much and it wreaks all kinds of havoc! Let’s talk about how to reduce and eliminate the debt in your life so as not to wreak havoc and cause money stress and anxiety.
Steps To Take To Eliminate Debt
Desire
The first step to eliminating debt is to have the desire and motivation. I wrote a post about this on LinkedIn. Find it here.
Tracking
The second step is to track your expenses. You can do this while making at least the minimum expenses. There are multiple ways to track expenses, and the “right way” is the way that works for you. There are apps that link to your bank account. Excel makes awesome spreadsheets (or very simple ones). Pen and paper works very well, too. Another effective way is the cash envelope system. You may also want to do a combination of any of the above as this is not an all or nothing system. Please don’t feel you have to choose only one way! If you don’t want to wait a month or longer before starting your budget, print out a month or two of bank statements. Go through those. You can’t fudge those numbers!
Create a Budget
When you have tracked all your expenses for at least a month, this is where you create your budget. In what category can you dial it down a bit? How much extra can you put toward your debts? Here is a link to a previous blog post about using the snowball method or the avalanche method.
Track Your Debt Payments
If you use powerpay.org, you can print out your customized sheet. You input your creditor, balance due, interest rate, and minimum payment. In turn, you get your own customized debt payback spreadsheet! I know people who like to print it out and put it on their refrigerator so they can always see it. Each month, they put check marks next to paid bills. There is something about checking off boxes every month knowing you are working toward your goals. You see each month laid out before you and also see your last payment! Your light at the end of your tunnel is there in front of you!
Final Thoughts
No matter how much or how little debt you have, you have to manage it one way or another. Don’t ignore it. Don’t put it on the back burner. If you need help, please reach out. Here at Ford Financial Management, we can help you clarify and work toward your goals.
