August 4, 2013

Take Charge of Your Money... Tackle Your Debt

Follow along with me, one step at a time.
I have never learned to control my spending. It has always controlled me. There seems to be more month then money. I have always been short and I never seem to have enough.

Where does it all go!
Sounds familiar?
Well, it does to me.

I've had it. It’s time for me to take control of my money instead of my money controlling me!
This time, I am determined. I was recently introduced to a system that if followed, promises to bring you peace and tranquility knowing that your bills will be paid and that you will even have some money in the bank. The steps are divided into sections and topics, to help simplify the process.

You are on Part 4 of the Taking Charge of Your Money Series

I am presently on  this step. I am working on pay off all of my debt. I have filed bankruptcy  in the past due to a job lost and I started to notice a pattern with my spending starting again.
 Until I was introduce to these easy steps will help me eliminate my debt and
 Take Charge of Your Money 
It will take me about 2 years to completely pay off  my debt because of my low income  however I am thinking out of the box and getting creative in able to achieve my goal and live debt free.
 I  am determined to learn to control money and not have it control me.
 I  have  had great  support  and encouragement from my family, friends and readers.
Ways to  generate more income will be shared soon...
Let's Begin...

Section 4 of Taking Charge of Your Money Series, Tackling the Unsecured Debt 

I recommend, taking one step at a time and fully understand the concept and  enjoy knowing the you are working towards Taking Charge of Your Money.  I welcome and encourage comments so that we could help each other made Living Life on 1 Income as a Single easier.

This is not punishment  even though it might feel like it is at time but freedom.

We will  now work on tackling all of our debt except the mortgage. 

Depending on the amount of debt that  is owed  and the income coming in, this step might take the longest to accomplish. Keep in Mind, we aren't to get into any more debt. If you are following along with the steps we should not be using credit what so ever. We are using and implementing our budget and we are current with all of our normal month expenses like: light, gas, cell phone, water bill, car note. And in step 3 we started building our  mini emergency fund

Now Let's Tackle Our Debt

On a blank piece of paper or on a computer spreadsheet, jot down ...

All  debt except the mortgage.
  • Credit Cards debt,
  • Student Loans,
  • Loan from a Family members or Friends 
  • Doctor Bill.
  • Etc

 For Example :
                                  DEBT                                                      MINIMUM REQUIRE PYMT
Credit Card 1-            $1874                                                              $75
Gas Card-                    $625                                                               $15
Credit Cards 2           $1254                                                               $50
Doctor Bill-                 $425                                                               $15
Car Note                 $16,500                                                             $250
Owe Brother                $625                                                                   0

The next step might be a little strange to some however by doing it you will find that you are achieving and getting things paid off. Rearrange you list from the  smallest debt to largest.
YES, smallest to largest.
By paying off the smallest debt first we'll get a sense of achievement and it will actually motivate us to keep going until all of our debt is paid off.

After the debt is rearrange either in writing of a spreadsheet computerized format,we will  start paying debt off. Once again, smallest one first!

                                 DEBT                                                      MINIMUM REQUIRE PYMT
Doctor Bill-                  $425                                                              $15
Gas Card-                     $625                                                              $15
Owe Brother                $625                                                              $25
Credit Cards 2           $1254                                                              $50
Credit Card 1-            $1874                                                              $75
 Car Note                 $16,500                                                           $250


Now,  tally up what will  be needed monthly to stay current.
The way we will do this is by:

Adding the budgeted amount for your monthly & periodical expense from: Step 1 of the series
then we'll   add the total amount of out minimum payment from our debt( this current step)

Monthly Expenses + Periodic Expenses + Debt's Monthly minimum = Need a Month to stay current.

Now, what is your monthly take home pay after taxes? Let's find out if it balances.

Need a Month to stay current-  Net monthly Income = left over

Is there anything money left over after deducting was is going to be needed to stay current?
If there is, an left over will go toward paying down the debt.

If there isn't enough money and  it did not balance, it is time to get creative.
What expense can you cut?
What can you do to bring in extra income?

 Any extra other money that will go towards your 1st debt until the debt is paid off.

                                 DEBT                                                      MINIMUM REQUIRE PYMT
Doctor Bill-                    $425                                                              $15 add $90 pick up  babysitting
Gas Card-                       $625                                                              $15
Owe Brother                  $625                                                              $25
Credit Cards 2             $1254                                                              $50
Credit Card 1-              $1874                                                              $75
Car Note                   $16,500                                                            $250

Now this is where you will see the debt dwindle and progress made.
You will  be defeating what you are working so hard  to accomplish.
That's: Take Charge of Your Money

Using my example.

I will add the $90  babysitting income and any other extra money that comes in and  use towards paying off my 1st smallest debt, until that  debt is paid off.

When  we finish paying off  the first debt, then  we will work on paying off  the second debt

I will then be  adding the $105 to the minimum gas payment $15+$105= $120 until the second smallest debt is paid off. When that debt is paid off I will take $120 and add it to my third small expense. I will repeat this until....
I am Debt free accept for my mortgage! 

You did not get in debt over night however it is the most rewarding knowing that you do not owe no one money.

Stay motivated by following my Blog, Reading motivations books and do anything that will help you  stay debt free and Take Charge of Your Money

Next Step is: Building Your Full Emergency Fund
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