Is Debt an issue for you?

Well, Debt is sure an issue for me. Starting next month I am going to start using a debt snowball plan. This plan is actually quite simple. You take the bills that you are currently paying on, for example student loans, mortgage, credit cards, car payments, etc... There are other types of bills that you will not include in the snowball, those are regular monthly bills such as electric, gas, water, cable, phone, etc... Also you do not want to include credit cards that you plan on still using.

I have downloaded a free excel sheet that you can enter your information in, and it will show you how to apply your payments. Ideally, you want to set it up to pay the highest interest items first, thus saving you the most money in interest, however by snowballing lowest to highest, you will see faster results on the lower balance bills, which makes you feel a better sense of accomplishment.

Debt Reduction Calculator for Excel - Download a free Debt Snowball Calculator and Debt Reduction Schedule spreadsheet from Vertex42.com.

The basics of this form of debt payment is that you take all of the bills you are going to pay, enter in the most current balance, the interest rate, and the minumn payments for each account. Then you decide how much you can afford to pay each month on bills. This amount must be higher then the payment amount. I suggest setting this amount at least $50 more per month, but the higher you can go, the faster your bills will be paid off.

Another part of getting in a better spot financially, is setting a budget for yourself. Everything boils down to spending your money the smartest way possible. The basics of a budget are to make sure that you spend less then you bring in. Income vs Expenditures. When figuring your income, use only your base bring home pay. Do not include any overtime, holiday pay, or any bonus money. If you have a 2nd job, try not to include that income in your budget unless you have to.

Some tips on paying utility bills. Since these usually vary month by month, it may be easier to set up average billing with the utility companies. This helps keep the amount about the same every month. You can do this with most electric companies, gas companies, and sometimes even to pay your water bill.

Another thing to keep in mind, it's cheaper to eat at home then it is to eat out. Set in your budget a set dollar amount for dining and entertainment and stick to it. Maybe you can eat out once a week, or twice a month. Movies maybe 1 a month, or maybe a sports event. Whatever you decide, put it down in writing and make sure you have the money.

You will also want to try to get a savings account set up. I use ING Direct I like this because it has a higher interest rate then most banks, and it's online and easy to use. You can set it up to automatically take money from your checking account and have it deposited in your savings. Just do me a favor, if you decide to use this as a savings account, let me know first. I can refer you (maybe get $10 out of the deal if you open with a large enough deposit)

If you have any questions on any of this, feel free to ask me.