Help Me Master Debt Balance

You’re In Big Financial Trouble, Where Should You Start?

If you have $10,000 or more of credit card debt, no money in savings, and student loans or vehicle loans on top of the credit card debt, then you are in financial trouble. 

It can be very scary to look at your finances in this way, and it should make it clear to you that you need to make some serious changes in your spending and saving behaviors.

The first thing you need to do is make a list of every single thing that you pay out each month using Microsoft Excel or some other type of spreadsheet software. Make four columns and label them; name of the bill, amount of the bill, whether it is essential (such as Netflix, Cable TV, etc.) or not and label either yes or no, and for your loans make a column to enter the interest rate.

Now you need to go through anything that is non-essential and ask yourself if you really need this service or not, or could you possibly get a reduced rate. You may end up cancelling several services (Netflix, Cable TV, etc.) and possibly reducing several others (like maybe a cheaper cell phone service). In the end, what you decide to cut your monthly spending by can help you get out of debt faster.

The next step is to go back to your essential bills and look at the loans carefully. Your goal is to reduce or eliminate these while adding some money to your savings account. Your primary focus should be on using most of your extra money to pay off any credit cards with interest rate over 10% immediately, beginning with the one with the highest rate. Depending on how much extra money you have you should at least start putting a few dollars into savings for an emergency.

It should only take a few months of commitment to do this and start to see your balances vanish. So, then you will be able to remove a bill from your spreadsheet and dedicate even more to paying off the other debts. Seeing these come off the spreadsheet will help you feel like you are accomplishing your task. 

The first phase is basically sitting down and being honest with yourself about the fact that you’re drowning in debt, but you also have to tell yourself that you have the power to pay it off.

6 Tips to Streamline Your Finances

6 Tips to Streamline Your Finances

I’m all about make things easier. I’ve done it with all of my bank accounts and retirement accounts. I continue to improve mastering it across additional areas of my life, even after it backfires on me like it does every once in a while.

There is no such thing as reading too many tips on how to improve your financial situation, and at a minimum you can walk away with a few extra "hell yeah's" if you’ve already implemented some of the steps listed below.

Here are the six tips to help simplify your financial situation:

Hold onto a couple of credit cards: This one is meant more for when you have all of your debt under control. This is one of my preferred ways to simplify because I feel that it makes life so much easier. If you are good a rate chasing then kudos to you, but to me it just messes up everything and clutters up my strategy. As a result I stick with just a couple of credit cards, Chase Sapphire Preferred® Card and Blue Cash Preferred® Card from American Express.

Pay your bills online: This step makes life so much easier. I wouldn’t know how to survive without online bill payment.

Automate everything: This kind of ties into the previous tip, but I’m a firm advocate in automating as many of your recurring bills as possible. This is particularly true for those bills that are approximately the same amount all the time. However I don’t prefer automating big bills like credit card bills or mortgage payments in case something crazy happens during that month.

Make sure you have overdraft protection: If by some chance I happen to bounce a check, it will automatically pull whatever amount that my checking account is short from my savings account. This helps to avoid any outrageous fees for doing something outrageous myself and not managing it all properly!

Build an emergency fund: While mine does fluctuate, I always have back up cash in case something crazy happens. I’m petrified about not having money on me at any particular point in time.

Pay yourself first: I prefer to have all my bills paid first to ensure that my family has a roof over their heads and food in their stomachs. However, I also make sure that I pay myself each year by maxing out my retirement accounts as well. This is something that I also think is very important (almost as much as ensuring food and shelter).

At any rate, with any luck some of these will help you out. Let me know how many you are able to check off by commenting below or how many you think are foolish. Nevertheless I’m sure you will agree that simplifying seem to work, whether it happens to be finances or not. It’s done wonders me ever since I committed to simplifying.