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Your
Debt Checklist
By: Dave Williams
A Debt Checklist is the only sensible way to organize
and control your finances. Most people aren't actually
aware quite how much debt they possess - in fact,
a recent survey found that almost 75% of UK adults
were up to £5000 out when asked to estimate
their non-mortgage debt. They weren't much better
when asked to produce a cashflow statement showing
how their hard earned cash was being spent each month!
A Debt Checklist is a plan you can use to get a grip
on your finances, and will allow you to understand
in black and white, where savings can be made, and
how debt can be tackled most effectively.
Obviously, you will have a savings account. If you
DON'T, go open one now. Choose a large, reputable
bank or loan company so you won't have any problems
getting access to your funds when you need them.
Secondly, you need to cut back on your credit card
spending. Credit card companies do everything they
can to encourage you to spend, and even more to try
and cajole you into only paying off the minimum each
month, making credit cards the MOST expensive way
to borrow money you are ever likely to come across.
If you find yourself paying for 'small' items with
a credit card, you are asking for trouble. Not only
will you be that annoying person in the front of the
grocery queue at Walmart paying by card, but you will
also rapidly lose ANY idea of what you have spent,
and where. Debit cards are SLIGHTLY better than credit
cards for these small purchases, but not much - you
will still face a terrible temptation to spend more
(up to 50% more than paying by cash, if recent surveys
are to be believed!)
You MUST pay more than the minimum payment each month
- if you don't your debts will be around for a LONG
time! It can take over 20 years to pay off a measly
$1,000 credit card bill if you simply pay the 2% minimum
each month. At the end of this, the interest payments
you have made will FAR exceed the original debt! And
that, of course, is how credit card companies afford
those swanky downtown offices.
If you have dependents, you need insurance. It may
seem like an extra cost right now, but believe me,
it is 'Murphy's Law' - if you don't have it, you will
need it imminently! Auto insurance, Mortgage Payment
Protection, house insurance and life insurance are
a basic set you need. This point is related to pensions,
too. Start as early as you can. If you don't have
a pension plan now, start it immediately. The tax
advantages just can't be missed. And the earlier you
start, the sooner compounding has a chance to work
it's magic. And compounding is the secret that will
determine if you have a comfortable retirement, or
live in a shack, eating beans. And don't try and kid
yourself you won't make it to old age - bet you will,
and bet you will be surprised how expensive everything
is in 30 years!
Read up on money, and money topics. If you understand
how cash works, the chances of getting into serious
debt decrease dramatically. I'm not saying you have
to read the Wall St Times, but an understaning of
interest rates and compounding won't hurt.
That's about it for now - Get saving!
About the Author
Dave is a freelancer who contributes to www.NoDebtEver.com
the free get out of debt fast site
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