The number one thing that I would recommend for anyone starting out with debt repayment is budgeting. Its the hardest thing to do, and the most time consuming, but ultimately I think it is the thing that makes the biggest difference. You really need to know how much you can devote to debt repayment.
I use Microsoft Money, but you don't have to pay for software to budget. There are plenty of ways to track your spending, from downloading a template for Microsoft Excel, to using a free online program, to only using your debit card for spending and then downloading the transactions. There are books that you can check out of the library (I like America's Cheapest Family, anything by David Bach or Suze Orman, or the Motley Fool) and copy the worksheets.
The point is, even billionaires have budgets. Actually, especially billionaires have budgets. In order to be in control of your finances, you can't be afraid to look at them. You need to be confident about what you can pay off, and proactive about making changes, and in order to do that, you have to know where you stand. So if you do one thing this year, track your spending for a month, look at your statements for the last year, and put together a budget.
Then you can obsessively make debt payoff date predictions like I do! :)
5 comments:
This is really great advice. There is no way to know how much money you have or even whether you can afford something if you don't know what your expenses are. Once you get in the habit of budgeting, it becomes so much easier. We started eight years ago by simply tracking all the money we spent in a little notebook. Now it's computerized but I can easily put together spreadsheets for whatever we want to see.
I also think take a notebook and write down what you bought and how much you spent for a month...You will be shocked! We used to spend over 500 a month on eating out. Now we spend maybe 50-75!
I have Microsoft Money and haven't been too diligent about using it. I'm feeling a little more motivated now, knowing what some of the capabilities are.
Hi, a friend of mine directed me to your blog since I'm trying to get on a new page about my finances. As far as budgeting goes, I was never ever able to keep with one because I am terrible at writing things down. But this week I came across mint.com's free online budgeting tools and it's helping me immensely. Don't mean to advertise, but I think a lot of your readers would like it as much as I do.
Thanks for what you do here, it's so inspiring to see somebody finding success with this stuff!
If people would of listened this advice a year ago, than they wouldn't be so worried about their financial stability anymore. THeir savings would of saved them!
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