Organize Your Debt
Many people with debt problems feel such anxiety that they don’t really want to know where they stand. Others simply have so many accounts that it’s hard to understand where they are and where they’re headed. Does this describe you?
It’s a simple truth that you won’t be able to make progress on your debt until you know where you are. And you can’t make progress without tracking where you’re going. And you can’t do any of this without a functional organizational system.
Here are a few suggestions for creating a workable management system:
- Set up files for each account. Seriously. Get the little manila ones and label them, one of each account. Go to Office Depot right now.
- Gather up your latest statements. If you don’t have a paper copy of the statement, go online and print it out. Continue getting paper statements for each month, since people tend not to look at electronic statements as carefully. Review and file them.
- Set up a spreadsheet or paper tracking system with a column for the following fields: balance, APR, payment date, minimum payment, amount paid, and expiration date of any intro APRs. Make sure you sum each column at the bottom to get total amount. Create a separate sheet for each month going forward. As a simple matter, you’ll have to pick whether to bucket accounts by month or payment due date. I recommend that you track the accounts by the month in which the payment due date falls, as that’s more closely correlated to cash flow.
- Create a summary sheet with space for your total debt and total credit card spending at the end of each month. If you’re visual, create a graph. If you don’t use excel, just use a ruler and create a manual one.
- Know your cash flow. Know how your outbound debt payment cycle compares to your inbound cash flow by comparing your debt payments to your paycheck dates. Just knowing the rhythms of your cash flow can help you avoid late fees.
After doing these steps, you should know your total debt, your total monthly required payment, what you currently pay on your debt, and how much you charge each month on your card. You have a system to track it going forward, and you know your cash flow will look throughout the month. Congratulations, you’re now prepared for serious progress.
Scott Crawford is CEO of DebtGoal.com, a do-it-yourself system for getting out of debt and lowering your interest costs. DebtGoal.com incorporates all of the techniques discussed in this post and can help users understand and get visibility to and manage their debt finances.
Tags: debt reduction, DebtGoal, organization
