Overall picture of your debt
Congratualions, by finding this site you have shown that you want to do something about your debt. For a lot of people accepting that you have a debt and that you need to do something about it is the hardest part of actually clearing the debt. Many people simply hide their head in the sand and hope it will go away, it won’t.
Probably the first thing to do is to actually draw up a ’statement of affairs’. Don’t worry, all this actually is is a list of your incoming and outgoings, i.e. what money you receive every month (or week) and what all you spend your money on every month (or week).
Normally the hardest part of this is our outgoings, since our incomings usually only consist of our salary. To make it easier to include EVERYTHING you spend your money on, it may be beneficial to keep a spend diary. This is simple a notebook you carry around with yourself to keep a note of everything you spend your money on (and what it costs), and I mean everything and that includes things as small as a bar of chocolate. If you get paid monthly then keep a spend diary for the month, likewise if you get paid weekly keep one for the week.
When you have finished your spend diary for whatever length of time you decided on, you need to sit down and create your statement of affairs. It can be helpful at this stage to hunt out bank statments to see what bills you pay automatically (if any) because you need to include these aswell.
You should hopefully now be able to fill out two lists, one with your incomings and one with your outgoings. On your outgoings columns you will have things like:
- rent / mortgage
- loan payments
- credit card payments
- electricity
- car payments
- food
- entertainment
- phone bill
- internet bill
- tv / cable
- medical insurance
- travel insurance
- etc.
Note: If you pay for things yearly e.g. travel insurance, then divide the cost of it by 12 to find out how much it costs you per month.
Now by totalling up the two columns you can find out, first of all if you are making or losing money every month and secondly where all your hard earned money is going.
If your outgoings are more than your incomings then you are either going to find a way of increasing the money you earn, or normally the easier way, decrease the amount of money you spend. Hopefully other articles on this site will help you achieve this.