“New Year, New Strategy – Part 2″

(by Christian Oey – CEO)…

Continuing on from my last post, where we covered the importance of knowing how much debt you actually have and paying yourself first, in this post I want to specifically touch on budgeting and paying off your credit cards/personal loan debts.

1. Budgeting

Budgeting isn’t as scary as it sounds. LIke most of you, I don’t like filling in forms, so what I tend to do is get a scrap piece of paper and handwrite the different things I need to pay each month, including groceries, eating out, credit card & loan repayments, etc . In my list, I also include savings (refer to my last post again by clicking here ), as well as once a year items divided into monthly amounts for such items as car registration, car services, birthday presents, Christmas presents, holidays, etc.

This list forms my wish list. If this list equates to more than I take home each month, I start tweaking and deleting things from this list. If I’m still in the red after doing this, I now have to conclude that I have an income problem. To fix this, I need to either get a second job, and/or get a better paying job.The idea is to have surplus funds at the end of the month so you can start attacking your debts.

2. Attack!

Using your list of debts from smallest to largest (refer to Part 1 of this post by clicking here ), use your surplus funds to pay extra on the smallest debt whilst paying the minimum repayment on the other debts, until the first debt is totally paid off. Once that is paid off, attack the next debt using the same method, and so on and so forth until all your debts are paid off. This is probably the quickest way of becoming debt free.

If you are a client of ours, you should be saving all surplus funds so it is stored up for the day we obtain settlements for you. These funds should not be touched, even for emergencies, as it is to be reserved for your creditors.

Once this task is completed, you should focus on saving 3-6months worth of expenses, then attack your mortgage.

Having said all of this, if you do find yourself with an income problem and you simply cannot afford to pay any creditor, then you should be either finding secondary work to supplement your current income or find a better paying job, but in the interim what you need to focus on as a rule of thumb is: food, utilities, basic clothing, roof over your head, transportation. Everything else can wait until your income improves.

No matter how old you are or where you are in your finances, it’s never too late to start…the key is STARTING!

Related posts:

1. “New Year, New Strategy”
2. “You’ve Lost Your Job..Now What?..”
3. “The Thing About Car Repayments…”
4. “Worrying about it won’t fix it…”
5. “How to Be Financially Free”