Now that we are really getting to the part where you have to track your spending and tell your money what to do, you might say to yourself, “I’m not sure I can do this,” or “Well, I will start next month.” Don’t wait until you are upside down to begin any of the income-increasing or debt-reduction strategies we have talked about. The more you can cut expenses and increase your income, the faster you will be able to get rid of your debt. And, this time of year is the PERFECT time to get started. Why? Because it’s TAX RETURN TIME. Many people totally BLOW their tax returns, but YOU know BETTER. Making a plan for your tax return dollars (just like making a plan for your monthly income dollars) can really get you ahead and set you up to win. Set your sights on the debt-free target ahead and don’t let anything deter you. Use your notebook ( or the bookyou got from Amazon ) to track where your money is scheduled to go before you let it leave. Here’s how: Write the name of one b...

There are many people who, once they write down everything and actually stick to their plan, feel like they’ve gotten a raise. Being in control will do that for you. This week’s task is to figure out every dollar that is going out. Add your total monthly debt payments to your total monthly expense payments. The total should be less than your monthly income. If not, then you have been living way beyond your means and you are probably using credit cards to just “get by” every month. If this is the case, you need to make some fast, hard adjustments to reduce your living expenses and/or get more money coming in. Here are some questions to ask yourself and your significant other: Is my television service really that important? Can I eliminate my home phone/can we find a cheaper cell plan? What subscriptions are we paying for that we can eliminate? How much are we eating out or “having drinks”? Can we brown-bag lunches? Can we combine trips in the car? Can we sell a car with debt and...

Last week I assigned you a task: “list all your debts in the order of that preferred method on the first page of your notebook along with their balances and monthly payments.” Hopefully, your debts did not fill up the entire notebook, because you also need to account for your living expenses. You: “So, what things are considered living expenses?” Me: Thanks for asking. Living expenses are items that you will continue to pay for even if you don’t owe anybody a thing. If you work for someone besides yourself and receive a paycheck, some of these expenses are automatically taken from your paycheck. There are probably more living expenses than most people realize, so here are some hints: Rent, Charities, Savings—Emergency, Retirement, College Funds; Taxes—Income, Real Estate, Auto; Alimony/Child Support (which should technically go away sometime, but it’s not really debt, so we’ll list it here); Child Care; Home Repairs and Association Dues; Medical—Deductibles, Co-Pays, Medica...

Last week I gave instructions to put your debts in order from the smallest balance owed to the largest balance owed. And, it is in this order that I intend to instruct you how to pay them off–you will pay the smallest balance first, and when that debt is paid in full, you combine that payment (that you are no longer paying because you are DONE with it) with the payment of the second smallest debt….you roll the first payment into the second debt. This allows payments to get larger and larger as you pay off creditors and is called debt snowballing . This system works for most people, is by far the easiest to understand, and allows you to see quick progress which is most likely to keep people motivated. But I would be remiss if I didn’t tell you there is another way to organize your debt, and that is by the percentage of interest you are paying–the creditor with the highest interest rate goes at the top of the pile, and you pay off that creditor first. When that debt is paid off, yo...

I know everybody is coming off a “Holiday High,” so we’re going to keep this low-key. In October last year, I told a story about a step in my daughter and son-in-law’s journey to financial independence (see “Half the Battle”). In that post, I said that much of the time, knowing where you stand can quickly project you toward the midway point in your battle (and this can go for more than just your finances). Once you know what your problem is, you can create a strategy to overcome it. I gave direction to start gathering all debt statements that come every month. If you have not done that yet, now is the time. Make sure you have ALL of them. You will also need a notebook (you can still use You Can Make Your Money Behave: Go ahead...I dare you! By U. Will B. Rich and can get it on Amazon. It’s $10). On each statement, I want you to find the BALANCE of your debt–what you owe to that particular creditor–and circle it or highlight it. At this point, I don’t want you to concer...