Cleaning up finances

Are your finances a mess? Do you find yourself barely scraping by each month? Do you make a decent income, but feel like you really have nothing to show for it? Do you ever find yourself wondering where your money is going? If you answered yes to any of these questions, then it is time to clean up your finances. Here's how:

1. Write down debts. You can't get your finances cleaned up if you do not take the time to be clear about where you stand. The mess in most people's finances lies with their debt, specifically credit card debts. So, gain some perspective, and get a clear idea of how much you owe, and where. Write it down, or input it into a computer program.

2. Write down costs of debts each month. Now you are going to look at the monthly cost of your overall debt. So, if your car payment is $200, your credit card $49, your student loan $87, and your time share $321, your monthly cost is $657. So write it all out, with each debt's monthly obligation listed separately, then totaled up at the bottom.

3. Add in an extra ten percent. You are going to clean up your finances by aggressively paying down your debts, and you are going to do this by adding 10% to what you are currently paying. So, if your debt is $657, you will add an additional $66 a month toward paying down debts. Which you will apply to the debt with the highest interest rate.

4. Write down pay off date. Now take the time to write down when each debt will be paid off following a normal schedule. When is the last debt paid off? Now set a goal to make it sooner. If your debt that will take the longest to pay off is in 5 years, and the shortest is 1 year, once that first year is up, you can use that amount toward the other debts for the next 4 years, which will help you pay your debt off faster.

5. Account for your income. Now you know how much your debt costs, plus some for an aggressive pay off, so now it is time to determine how much you have left after debts.

6. Do the math. Your income, subtract your debts and 10% extra. Now how much do you have left? Divide that amount the number of weeks in the month.

7. Now take what you have. This is how much money you have each week to spend on groceries, fuel for your car, entertainment, oil changes, etc. If you don't like the idea of a weekly limit, then subtract debt + 10% from your income, and take what you have left and divide it out into categories like food, fuel, and entertainment for the month.

8. This is your new budget. If you follow it, your finances will clean themselves up!

9. Make it easy to stick to this budget you set for yourself by doing the following:

• Cut up cards or take them out of your wallet.


• Use cash.


• Break your money up into weekly allowances so you stick to it better.