In that last installment of How To Payoff Your Debt Faster, we learned that they very first step to paying off debt faster is to get your money right and set financial goals. There’s more to it tho!
You can’t get your money right if you don’t have a clear understanding of what you are working with. You know you’re in debt but do you know how much exactly??? Do you know why you are in so much debt?? Do you know how you got into so much debt??? Do you know how to prevent yourself from falling in debt again??
To understand your finances you need to get a firm grasp on how much money you bring in every month and how much of that money goes out every month. You need to know your net income.
After you pay your bills and your living expenses and all your liabilities (car loan, student loan, credit cards, etc.) Do you have any money left over? If you are as broke and in debt as I was, the answer is no, its negative (panic laughter). And if you do have any money left over, what do you typically do with all that money?
To figure out and understand your finances you will need a tool to help organize and sort your income and expenses. Some people use apps, others opt for spreadsheets. I personally went the spreadsheet route (digital).
I created a digital workbook that helped me with my personal finances and get out of debt faster. Find a tool that works best for you and lay out all your finances. Figure out where every single one of your hard earned pennies goes every month - with accuracy and not guesses. The Get Your Money Right Workbook worked for me because being able to see everything all laid out - your income, your expenses, your left over change in one place, easy to read and colorful format made it easier for me to understand what I was working with, monetarily.
Once you have all your income and expenses laid out, you can dive in and learn about where all your money goes on a monthly basis!
Step 3: Analyze Your Expenses >>>
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To follow my journey to debt-freedom, live and step-by-step, follow my Instagram, here.
For a consolidated list of the steps I took to pay off over $22K debt in 7 months, check out my blog post - How I Paid Off Over Over $22K in 7 Months While Living Paycheck to Paycheck!