“New Year, New Strategy”

(by Christian Oey – CEO)…

If one of your new year resolutions this year is to get out of debt, or more simpler, to take control of your finances, here are some tips to get you started.

1. You need to know exactly where you are. This includes utility bills and all your other debts. The best way is to list them smallest to largest so your starting point will not freak you out and cause you to give up before you start!

2. It takes a lot of discipline to get out of debt & if you spend every cent you earn you may never achieve your goal. I bet, like many people, you currently pay all your bills first out of your salary, then try to save a little extra on the side, right? Problem is, there usually isn’t any left on the side to save! That’s when you know you are so broke you can’t even afford to pay attention!

Alas, I have a solution – PAY YOURSELF FIRST! It’s important that you save a $1,000 emergency fund as of now. This is for circumstances like needing a new tyre, you broke a tooth, your kid smashes a window with the cricket ball, the hot water tank decides it’s over, the fridge melts… etc. Later on, when you are debt free, you aim to save 3-6months worth of expenses.

After the $1,000 is saved, you then open another account to start putting away funds to pay toward your debts. If you are one of our clients, this money you put away can be accumulated so we can throw lump sum carrots to the creditors. If you are not a client, then you start attacking your debts one by one, from smallest to largest. More of this next post.

Important note: you use any of the emergency fund, you replenish it.

So how do you pay yourself? Easy. Imagine yourself as a creditor and you owe yourself $X each pay or each month or on a specific date. Add yourself to your bills list. So, this means you need to open another account, preferably an online account where it pays interest and you don’t have easy access to it through a debit a debit card.

How much do you pay you – the most important creditor? That’s up to you and according to your budget. Yes. You need to do a BUDGET. If you won’t BUDGE, you won’t have IT. I’ll cover that a little bit more in my next post.

Ideally 10% is the going rate, but if you can only do a smaller percentage, it’s better than no percentage. Got it?

So, find out your total debt amount so you know what the score is so you can put together your game-plan. Then, put yourself down as a creditor – the number one creditor and start paying yourself first. So, when you get paid, you take 10% out first and transfer it online into your online account. Of course, if you are a church-goer, some of you might tithe in which case you may tithe first, then pay yourself.

This should help you get started. But remember, knowledge like this is great, but if you don’t put it into practice then it’s just head knowledge, and that won’t help much. Think back to Algebra….I don’t know why I had to learn Algebra, it’s unlikely I’ll be going there….

To be continued…..

Related posts:

1. “You’ve Lost Your Job..Now What?..”
2. “Does Debt Consolidation Work?”
3. Good Debt, Bad Debt
4. “Worrying about it won’t fix it…”
5. “The Thing About Car Repayments…”