I’m in Debt. Where to Start?

They say admitting a problem is the first step in dealing with it.  The only thing is, I haven’t been denying it.  I’ve known and been managing the mountain of debt over the past few years and slowly (and I do mean slowly) there are shards of light poking through.  No, it may not be the “I’ll be debt free in X days” but instead the sense of “ah…my lungs aren’t collapsing.”  

Where do I start?

  1. Take inventory of your debt.  Yes, it’s ugly.  I do this in excel with each account name downt the left and the month/year running along the top.  I input the the ending balance of each account at the end of the month.  I do include property taxes, etc. and not just credit cards,
  2. Find a few blogs to read every day.  You never know where the next tip or bit of inspiration to get you through the day comes from.  Some of my favorites are Blogging Away Debt, Beachgirl’s Budget Blog, Windy City Blues and Counting My Pennies.
  3. Make a Monthly and Weekly Budget.  You don’t need a fancy system for this.  You can use a notebook, the back of an envelope or stolen napkins from the washroom at the gas station – it really doesn’t matter.  Write down how much you take in each month and how much you are obligated to payout.
  4. Prioritize.  Easier said than done.  What items can you not go without each month (e.g. health insurance, prescriptions, utility bills); what items can you do without (e.g. weekly dinner out); and what items can you focus on trimming either by competitively shopping or seeking a reduction in the bill (see my lower your cable bill article).
  5. Set Short-Term and Long-Term Goals.  For the month of September, I’m looking to add no new debt.  I realize that sounds crazy, but it’s the only realistic goal given what I know the income and expense outlook is for Sept.  In October, I’m looking to pay our 2009 tax bill.  Long-term I’d like to have no debt other than the mortgage…but that’s a long way off!

This is my starting point and it may be different for you.  Yes, you can get into the “what do I pay off first?!?” conversation and we will.  For now, let’s just call a spade a spade and in this case, the spade is buried pretty deep in debt.

Billshrink – Shrink, shrink, shrink my bills

BillshrinkIf you haven’t tried Billshrink yet, what are you waiting for?  It’s easy, it’s free and best of all it’s about YOUR specific usage. 

Billshrink monitors the marketplace for you to tell you when your carrier/service or competing carriers/services have new/better plans that can save you money.  (Hey, if you were waiting for your wireless provider or credit card issuer to call you to let you know about other plans available to save your money well… I hope you look good in blue.)

Billshrink has two services available now – wireless/cellphone and credit cards.  It’s pretty easy and I’ve blogged about the wireless service before. 

How does it work? 

For wireless, just import your wireless plan (you need to have your wireless phone number and online account password handy for your wireless provider) and Billshrink quickly analyzes your usage and what other plans on the market would save you money.  Best of all, you can also see what the coverage is like for the carrier for your home, work or other zip code areas.

For Credit Cards – you select your credit score, which card service you have (Citibank, Chase, etc.), average balance you carry and perks you get – miles, cash-back, points.  Billshrink then crunches all of the current plans out on the market and suggest which cards can save you money.

Best of all, be sure and GET the mailings as when new plans come onto the market based on YOUR usage, Billshrink sends you a new report – free – with the saving details.   I like letting someone else crunch all the numbers for a change! 


Great Budget Blogs to Read

Of course Today’s Budget should be top of your list if you are looking to change your spending habits, be debt-free and increase your net worth.  But, there are also some stellar blogs out there by people from all walks of life who have found there way into piles of debt.  

Like me, each brings their own story, pain and financial frustrations to their blog.   All of us bring secret weapons to share – acknowledgment of the situation, innovative ways to attack debt, techniques such as snowballing payments and …. financial goals.

Here are some of my favorites

In Debt Because I Like Nice Things
Follow Twiggers in her adventure of shedding over $65,000 in credit card debt.  Learn how she got there (hint:  $20k of charges for Louis Vuitton bags in one year).  Watch her monthly plan of attack, updates and her snowball payment plan which is working.  Go Twiggers!

Bouncing Back from Bankruptcy
Bankrupt Betty’s journey through bankruptcy.  How she’s managing the process and what’s she’s doing to reclaim her life and sanity. 

We Need To Be Debt Free
Following this couple is a must read.  If you have kids and are stressed about debt and the future, here’s a family that can relate.

Single Guy Money
Point-blank, I like his goal of wanting to be free of all non-mortgage debt by 2009. 

Beachgirl’s Budget Blog
You have to love Beachgirl!  She’s heading to law school, is watching every expense, tracking and paying down debt and smart about looking for extra cash.  

The Budgeting Babe
Nicole is a working girl in Chicago on a budget.  What working girl doesn’t like nice things… Sex in the City on a Simpson’s budget.

My Debt Journey
I was thrilled to find this blog as it mirrors my own life and situation.  A debt blog about a family in their 30’s struggling with $75,000 in credit card debt and a possible foreclosure on the horizon. 

There are many more personal finance blogs out there.  I picked the above because I enjoy reading them, they are updated daily (or near-daily) and hey, I can relate! 

Word to the wise…there are blogs out there known as “link farms” – sites setup with copies of news, other’s blog content with ads for the sole purpose of getting you from the search engine and wanting you to click on ads.  Avoid these if you hit them.   

Free Loan Amortization Spreadsheet for Excel

If you are looking for a quick and easy way to create a loan payment schedule, I found this easy to use (and free) excel loan amortization spreadsheet

Simply input the loan amount, start date, interest rate, term and payment frequency.  It’s easy to see how adding a little extra to each month’s payment impacts the end balance and time to payoff.   

I use the spreadsheet for personal loans and consumer loans.  Plug-in your car loan or mortgage and start paying off your debt

Download the spreadsheet for excel.