bluntmoney.com

Where do you start when you’re ready to begin getting out of debt? Whether it’s paying off your $6364.70 student loan, getting the collection agencies to stop calling, or getting out from unexpected medical bills, you have to start somewhere. But before you begin, give yourself a break. No matter what your current financial situation is, it can be improved. While you can (and should) learn from the past, beating yourself up over mistakes you may have made in it won’t get you anywhere. Once you’re ready to begin getting out of debt, start by finding out where you are. (You can’t get to where you’re going if you don’t know where you’re starting from.)

To find out where you are, gather all of your financial information in one place. I suggest using a spreadsheet for this, but if you don’t want to do it on the computer a paper notebook will work just as well. (Be sure your computer file or notebook has adequate protection from would-be information thieves.) If you find this step overwhelming or dread doing it, force yourself to do at least one thing on it every day anyway until it’s done. It’s worth it, and chances are you will feel a lot better when it’s done.

Make a list of all of your accounts & bills: savings accounts, checking accounts, money market accounts, CDs, credit cards, car payments, utility bills, phone bills, cable, mortgages, etc. Everything, regardless of the balances. For each account, list the name, address, account numbers, cash value, total balance (positive, negative, or zero), minimum payments, due dates, interest rates earned or charged, and any special terms and their expiration dates. Don’t forget abount annual things such as taxes and car insurance. Add up the cash value of everything you own (your assets), and then add up the total amount you owe (your liabilities). Subtract the amount of your liabilities from the amount of your assets. This will give you your net worth. Don’t worry if it turns out to be negative, or isn’t as much as you would like — the point is to find out what it IS, and what the total amount of your debt is. I do my net worth on a monthly basis (after this initial time, it only takes about 5 minutes if you do it regularly).

Next, list all of your sources of income and the total monthly amount you typically receive from each source. Some sources of income may include salary, business income, rent received, child support, alimony, rebates, reimbursements, tax refunds, interest, gifts, prizes, found money, ebay, garage sales, babysitting, etc.

Once you have completed this step, you’ll have a good picture of exactly where you stand financially. And you’ll have done the hardest part: getting started. Step two will explain how to begin tracking your expenditures.

• Make 2009 Your Year to Get Debt-Free Getting out of debt is an admirable goal at any time of the year. But you have to admit, starting your journey to a life...
• Debt is Slavery, Part 1: Do people have your best interests at heart? I received a complimentary copy of Michael Mihalik's Debt is Slavery to review.  It's a short book -- 123 pages soaking wet -- but it...
• Free Financial Management Software When it comes to your getting out of debt, having the right software can actually make a real world of difference. Some people tend to...