1. Know where you stand List how much you could expect to sell everything for. Inventory watches, boats, vacation time-shares, retirement accounts, etc. Do the same for your debts from friends, family banks, credit cards. Subtract how much you owe from how much you own. This number is your Net Worth. If your Net Worth Index is a negative number, you really do need to gain control of your money.
2. Develop Your Goals The next thing is to set some reachable targets or goals. Goal setting is not complicated and in this instance requires a few measurable small goals, like baby steps.
Your first baby step is to begin pay off your debts. By paying the minimums on all debts and extra each month on the smallest debt, it will soon be gone. Then roll that money over to the next smallest debt. Keep doing this until you are out of debts to pay off.
Second baby step is create an Emergency Savings Account. Add money each month until you savings equal to six months of after-tax income. The money you set aside here will help you avoid debt when you have to make a surprise car repair or meet the deductible for your child‚s appendix operation.
3. Spend with a Plan Use your gross monthly salary and deduct all taxes, Social Security and charity. Now pay for is your house expenses and your grocery bill ˆ this is only food you prepare yourself. Subtract your debt payment.
The remaining amount is Disposable Income. Buy the things you want with this money.
Keep your spending below your income and you‚ll be in control. Involve the children and find small ways to reward them for their practical money saving ideas.
4. Clean Up Your Clutter Have a garage sale. Apply the money you raise towards your smallest debt repayment. Look for larger things in your life that cost you money. Can you sell your unused vacation home or that third car?
It might hurt, but once you have taken the first steps you will feel an easing of the burden on your shoulders. When you are debt-free and telling your money what to do you‚ll be a happier person.
