Ok, we have already agreed that we are going to get our budget on track in 2015. Now are you ready to dig in??
The first step is finding out how much debt you really have. Debt is money that you owe.
I know that it probably isn’t going to be a process that you want to go through, but you have to face the reality of the situation if you ever want to get out from under it.
You need to know how much debt you have. In total. All of it. From everywhere. Mortgage, credit card(s), car loans, personal loans, friends, family…
You might think you know how much debt you have “off the top of your head”, but I want you to sit down and put pen to paper and figure it out for real. The only person that will ever see that list is you – unless you share it with someone – so be real. Do it for your own peace of mind and well-being.
I know it’s gonna be ugly and you’re probably stressing out just thinking about it, but remember, THIS IS STEP ONE. There are many, many more coming after this one to help.
You can list out your debt on paper, or use excel. I am a big fan of using excel for my budgeting. I will be sending out my budget template next week so make sure you’re on the email updates list.
To figure out all of your debt, make five columns:
- Creditor (who do you owe money to?)
- Total amount due
- Date by which it must be paid in full
- Interest Rate
- Monthly payment (this should be how much you need to be paying each month)
It is hard to remember exactly how much you owe to many different creditors/people and it is only when you do take account of all the individual debts and add them up that you can actually see the extent of your debt and then put a plan together to get rid of it. ALL OF IT.
Be prepared for a surprise because if you tend to sweep it under the rug and not deal with it, going through this process will give you a really good picture of why you are struggling to make ends meet each week. And it will show you in black and white why your income is never enough to get by each month.
Step one in this budget process is to address the situation head on. Take a day this week and get real with yourself. Sit down and list all of your debt. Include any and all debts, even the ones that you owe to friends or family (if you have them).
It is only after you have done this that you will be able to create a budget that will help you move towards getting rid of debt. And I will walk you through how to do this the whole way. In a few days I will email you my budget template so be sure you are signed up to receive email updates.
With the budget template I will send out, you will be able to compare your monthly spending to your monthly income and that will give you the opportunity to see how much is left over if any to start reducing your debt. The debt that you are going to list out this week. No later than Saturday evening at 5pm.
Yes, I have just given you a deadline. What are you waiting for!?
If you’re looking for my budget template, you will gain immediate access when you sign up for email updates.
Disclaimer: I am not a financial professional and don’t play one on tv. The information provided on Single Mom on a Budget.com is my own opinion and should not be construed as fact or advice, and you follow it at your own risk. You are responsible for your own personal finances and should not rely on this site to make the final decision for you. This blog is my means of communicating my experiences to you and to prompt you to think and consider your own situation, but you are 100% responsible for any actions you take. Always consult an attorney or tax professional regarding your specific legal or tax situation.