In part one we talked about how change and planning are so important to getting your finances and life in order. We made a list of our goals, wrote down our monthly bills, made a list and arranged what we knew we owed (before looking at our credit report), and made our first budget.
A couple important things to remember:
* Writing down our short, medium, and long term goals makes us think about the long term. Most times, we don't think about the future and how we are going to get there.
* Do you know what exactly you have to pay each month? That's what writing down when and what you owe monthly does for you. I have my bills written on a monthly calendar on my desk at work and in my office at home. I'm have a pretty bad memory, so I also have alerts set up on my phone to remind be a day before to pay the bill if I haven't done so already. Knowing is half the battle...
* The reason we write down what and who we owe, as far as debt, is to start to get a grasp of just how bad - or good - the situation is before you start tackling the debt. The good thing about you making the list is that YOU get to decide the order to place each debt in. Maybe you owe a family member and are behind on some monthly bills, what would you tackle first? Personally, I would jump on those monthly bills. Make sure you discuss with the person you owe and let them know your plan to pay them back also. Acknowledgment of the debt will go a long way with building good faith with that person.
* We made a budget. Not a final budget but a trial budget. This first budget is a trial budget because it takes a couple attempts at budgeting to make one that you are comfortable with. Trial and error. Don't get upset if this first budget doesn't work. There will be more.
So, now that we have the beginning stuff done, let's move on...
1. Go to Annualcreditreport.com and get ONE copy of your credit report. You are allowed one copy of each of the the 3 reporting agencies each year. Spread them out and get one copy every 4 months. The reports are not exactly the same so we get each one separately to make sure we are aware of ALL of the debts. Make sure you answer all of the security questions as best as you can because if you get one wrong it can make getting that report a bit more difficult. Put each debt and contact information into the debt list we made last time, from most to least important.
2. Using that Mint account you set up, go over your monthly spending. Where do you spend too much? where can you cut back? Spending too much on lunch at work? Pack your lunch a couple days a week.
3. Adjust your budget. Using Mint, or however method you chose, to make your budget, adjust the budget to change what wasn't exactly realistic. Don't just change amounts because you want to go out more, but if you saw you didn't spend all of the budgeted money on wants, lower them. If you need more money for transportation to work, raise it a bit. Don't go over your monthly limit.
4. Now that we are starting to control what and where we spend money, it's time to start finding money. Do you have a hobby you can turn into extra income? Sell the clothes you don't wear? Tutor? Freelance? Get a part time job? Make a list of 5 things you can do to make extra money.
Smile. Your starting to get your financial life in order. We still have a ways to go but you will see all this effort start to pay off very soon. All of this is getting you organized for the real work. It seems like a lot now but you will be glad you took the time to get this in order later. That vacation you want to go on, the house you want to buy, those shoes...we are planning to get those things, without worrying about paying for it because we have planned our work and worked our plan...