The Process of Elimination

As an American child, I was taught to dream. I was shown all the possibilities of being an adult through the modern convenience of television and movies, which included keeping a big home, furnishing it from top to bottom, wearing the latest styles, driving a new car, and taking my family to Disneyworld once a year. As an adult, I now struggle with the idea that I am entitled to those things. Many adults are conditioned to judge their success in life based on these experiences. A sense of entitlement and a culture of impatience is what prevents us from budgeting our income and eventually buries us under a mountain of debt.

Eliminating debt is a daunting task. The first step to tackling your debt is realization. Find a way to lay out every loan, every dollar borrowed onto one page. Get the big picture at one glance. Create a column to show each loan. Include mortgage(s), home equity loans, auto loans, student loans, credit cards, or whatever else you might owe. Make 4 more columns to give you a good idea of the following: the Annual Percentage Rate (or APR), total amount of the loan right now, amount of payment, and estimated payoff date. Though this step may be painful to look at, a good dose of reality is a healthy antidote. This step should be repeated frequently to properly see your own progress. Don’t throw away your old pages, but use them as motivation to keep going.

The next step in your quest for freedom from debt is thoroughly budgeting your income. The goal should be to completely live within that amount, including all bills and necessary expenses. Many different methods are available for budgeting your income and expenses. Do a little research and find out which method is right for you. For now, create a page that lists all of your monthly bill payments. Include all utilities and services, all loan payments, groceries, and gasoline. Create another page to list things that you might not pay for each month, but still take a significant amount of money throughout the year. Take into account auto repairs, medical visits and prescriptions, trips, clothing and home purchases, higher heating or cooling bills, holidays, gifts, and home projects. Use previous bank statements to figure out about how much you spend per year, then break that amount down by pay period to help you decide how much to allot in your budget. If possible, apply as much as you can of your discretionary income to paying down your debts faster. Once you come up with a combination that works with your budget, it will be absolutely necessary to abide by it. This is not intended to be simply a suggestion, but a guideline for spending. Accounting for every penny you spend is vital to making your budget work.

The final step is to be completely committed to paying for things if the money is there and foregoing items until enough money has been saved. Do you need it, or do you just really want it? Leave your credit cards at home. It is fine to buy the things that you really want if you’ve been disciplined enough to save up for the item or fit it into your monthly spending. Of course it feels good to buy things, but that good feeling will turn into regret and possibly despair if you find you don’t have the willpower to control your spending. Forget the Joneses! They probably are buried under that debt mountain. Take pride in the fact that you will be living within your means and soon unencumbered by the suffocating weight of high-interest debt.

Jennifer Tankersley is the creator ListPlanIt.com where you can find over 400 printable lists and planning pages to organize your life and put your world in order, including such financial planning pages as a Checking Account Register, a Yearly Expenses Worksheet, a Debt Worksheet, and a Bill/Expenses Schedule. She also writes List Mama Blog: Lists for List-Lovin’ Mamas.