How I Began Paying Off My Debt in Three Steps

There are thousands of articles on the internet explaining how to handle your finances. Some show ways to cut spending, some discuss how to manage debt, some talk about savings, and the list goes on and on. I have spent a great deal of time reading many of these articles. While most of them offer sound advice, it seems to me that several of these articles have a "cookie cutter" format, which obviously doesn't work for everyone, since everyone is different. That is why I have created my own plan to financial wellness.

Before I begin, it is important for me to mention that I am not a financial planner or a brilliant businessman. I simply have done a great deal of my own research and have tried many different methods to balance my finances.

The following is how I have balanced my finances and brightened my financial future. This article will not answer every question you have, nor will it solve all of your financial woes. This won't even give you that many specifics. This is simply a guideline, filled with common sense strategies.

The first step I took to help create financial wellness was to create a spread sheet, containing all of my financial information. I created a column for each bill I pay, along with the current minimum payment due, its due date, the total amount due, and a list of payments currently pending from my checking account. I added a total column at the bottom of each list, to easily see how much I owe and how much is currently pending, in order to help calculate where my checking account should be. I also added a separate spreadsheet to list the total debt each month, to help track it.

The second step I took was to build an emergency fund. I put two thousand dollars aside, in case something comes up or I can't make all of the minimum payments with my current paycheck. I also use this money for any extra purchases I need to make, in order to completely avoid putting anything else on credit.

Now that I have stopped spending on credit and I know where my money goes, when my check comes in I replace my emergency fund to the two thousand dollar threshold and put all extra money onto my highest interest credit card, to pay it down as quickly as possible. Remember, paying the minimum could take years and cost a lot of extra money in interest.

This is a very simple look at how I am managing my finances and it works for me. There are a few others things to remember. First, there are a lot of financial articles out there from many different experts. Read them! Secondly, be patient. No matter what your financial goals are, it takes time to achieve them.

Finances can be tricky. There are often more bills to pay and things to buy than money in the bank. No one method works for everyone. Define what your goals are, educate yourself on how to obtain them, and remain disciplined. Create a plan, try it out, and reevaluate it. Don't spend money that you don't have. Debt costs money in itself, get rid of it as soon as possible. Good luck.