How to Make a Debt Management Program
Include every payment you must make on a regular basis., Don’t forget to include expenses that may not occur on a regular basis: Car registration Club membership dues Clothing, shoes and accessories School expenses (field trips, projects, proms...
Step-by-Step Guide
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Step 1: Include every payment you must make on a regular basis.
You need to include the everyday expenses that most people forget to factor in.
You will not be able to divide your income to pay for every bill you owe unless you know what your real expenses are.
Make a list or create a spreadsheet of all payments that you must make on a regular basis.
If the amount fluctuates, such as a utility bill, use the highest average monthly bill as a guideline.
Use these ideas to get started, but include other bills you may have:
Mortgage Insurance (home, car, health, life) Real estate and personal taxes Car(s) Credit cards Utilities (gas, electric, water, sanitation) Telephone/cell phone Internet TV (satellite, cable or other) Groceries Health & beauty (include vitamins, prescription drugs, personal grooming, haircuts, spa visits, etc.) Also include the cost of using a Laundromat if you don’t have a washer and dryer.) Gasoline (include gas for lawnmower, snow blower, chainsaw, etc.) Routine vehicle maintenance (oil changes, recommended tune-ups, new tires, etc.) -
Step 2: Don’t forget to include expenses that may not occur on a regular basis: Car registration Club membership dues Clothing
, Include regular and irregular income:
Wages and tips Bonuses and stipends Interest and dividend income Freelance income Alimony and child support Social security and retirement payments Seasonal income , If your expenses exceed your income, you must address that issue before you go any further. , Most people can’t immediately increase their income, so it is easier to manage your debt by decreasing your expenses.
Attack all nonessential expenses first:
Entertainment Manicures, pedicures and hair salon expenses Coffee or soft drinks you purchase daily Clothing and shoes , Some will reduce your debt burden dramatically, but all will help in some way:
Refinance your mortgage for a lower interest rate Ask your credit card companies to give you a reduced interest rate (they sometimes will) Switch to an insurance company with lower rates Eliminate premium cable or satellite packages.
Adjust your thermostat by several degrees year round.
Cancel all magazine and newspaper subscriptions.
Use grocery coupons, buy generic brands and buy what is on sale Buy day old bread and marked down, slightly dinged canned goods Shop for used clothing and household items Start a garden and grow vegetables and herbs. , Look over the monthly statement of each of your credit cards.
Allot the highest payment to the card that has the highest annual percentage rate (APR).
For example, if you have 4 credit cards pay the minimum due on the 3 with the lowest APRs and increase your monthly payment on the card with the highest APR.
When that card is paid off, apply the same repayment plan for the other cards. , Open a savings account if you don’t have one.
Even saving $1 a day will net you $365 at the end of the year. , Always try to pay cash for everything.
Don’t use a credit card unless it is for an emergency.
Buy what you need after you have saved the money for it. -
Step 3: shoes and accessories School expenses (field trips
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Step 4: projects
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Step 5: sports equipment) Entertainment (movies
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Step 6: magazines
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Step 7: newspapers
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Step 8: rental movies and books
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Step 9: restaurants
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Step 10: museums
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Step 11: hobbies
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Step 12: sports
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Step 13: vacations) Gifts and cards (birthdays
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Step 14: anniversaries
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Step 15: graduations
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Step 16: wedding and baby showers
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Step 17: holidays) Postage (letters and packages) Home office and school supplies (ink
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Step 18: computer cleaning equipment
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Step 19: batteries
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Step 20: pens and other office supplies)
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Step 21: List every source of income you have.
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Step 22: Subtract the total of all your expenses from the total of all your income.
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Step 23: Increase your income or decrease your expenses.
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Step 24: Go through your list of regular expenses next to see if there is a way you can reduce them.
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Step 25: Pay down your highest interest debt first.
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Step 26: Start saving.
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Step 27: Don’t increase your debt load.
Detailed Guide
You need to include the everyday expenses that most people forget to factor in.
You will not be able to divide your income to pay for every bill you owe unless you know what your real expenses are.
Make a list or create a spreadsheet of all payments that you must make on a regular basis.
If the amount fluctuates, such as a utility bill, use the highest average monthly bill as a guideline.
Use these ideas to get started, but include other bills you may have:
Mortgage Insurance (home, car, health, life) Real estate and personal taxes Car(s) Credit cards Utilities (gas, electric, water, sanitation) Telephone/cell phone Internet TV (satellite, cable or other) Groceries Health & beauty (include vitamins, prescription drugs, personal grooming, haircuts, spa visits, etc.) Also include the cost of using a Laundromat if you don’t have a washer and dryer.) Gasoline (include gas for lawnmower, snow blower, chainsaw, etc.) Routine vehicle maintenance (oil changes, recommended tune-ups, new tires, etc.)
, Include regular and irregular income:
Wages and tips Bonuses and stipends Interest and dividend income Freelance income Alimony and child support Social security and retirement payments Seasonal income , If your expenses exceed your income, you must address that issue before you go any further. , Most people can’t immediately increase their income, so it is easier to manage your debt by decreasing your expenses.
Attack all nonessential expenses first:
Entertainment Manicures, pedicures and hair salon expenses Coffee or soft drinks you purchase daily Clothing and shoes , Some will reduce your debt burden dramatically, but all will help in some way:
Refinance your mortgage for a lower interest rate Ask your credit card companies to give you a reduced interest rate (they sometimes will) Switch to an insurance company with lower rates Eliminate premium cable or satellite packages.
Adjust your thermostat by several degrees year round.
Cancel all magazine and newspaper subscriptions.
Use grocery coupons, buy generic brands and buy what is on sale Buy day old bread and marked down, slightly dinged canned goods Shop for used clothing and household items Start a garden and grow vegetables and herbs. , Look over the monthly statement of each of your credit cards.
Allot the highest payment to the card that has the highest annual percentage rate (APR).
For example, if you have 4 credit cards pay the minimum due on the 3 with the lowest APRs and increase your monthly payment on the card with the highest APR.
When that card is paid off, apply the same repayment plan for the other cards. , Open a savings account if you don’t have one.
Even saving $1 a day will net you $365 at the end of the year. , Always try to pay cash for everything.
Don’t use a credit card unless it is for an emergency.
Buy what you need after you have saved the money for it.
About the Author
Mark Williams
Dedicated to helping readers learn new skills in creative arts and beyond.
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