How to Get Out of Debt Guide – Part 1 of 6

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Do you struggle with managing your finances? Are you living paycheck-to-paycheck? Is it difficult to just make the minimum payment on your bills? Maybe you earn a decent wage but for some reason you just can't get ahead. In my opinion, the better question is do you want to live free of financial worry and debt? Do you want the freedom to choose what you do for a living or where you live or what you do with your time? If you are honest with yourself you will admit, regardless of how much money you earn, that you wrestle with making the most of your money. I am no different. That is why I continually share the solid principles that I have learned in managing my finances. Having control over your finances is empowering.

Experts agree that it takes at least 30 days to start forming a habit. That is, performing the same routine every day, day after day. Mastering finances can take a lifetime. I am going to share my system that uses the KISS methodology (Keep It Simple Silly). By the end of this guide you will be able to know where you currently stand on the financial podium, where you are heading, how to create an action plan and exactly how to power down your debt.

School systems do not teach how to manage your finances so the burden is on each one of us to learn as early on in life as possible. The sooner we learn, the sooner we can live a life that is free of unnecessary stress. God made each of us unique and special and he wants the best for us in life. Sometimes the best things for us are not what we want however. Selling a house that we can't afford is not easy. Driving a used "beater" car can be embarrassing... if we focus on the here and now instead of the big picture. So, let's be honest. We love honesty, especially me. (Dishonesty is probably my biggest pet peeve!) So, be upfront when we look at your finances. When asked for a "value" of something make sure it's comparable to what the market value is not what you paid for it. Keep it simple, round up if in doubt. It's always better to find hidden money than to find you still owe! Regardless of where we stand on the financial podium there is always room for improvement.

Before we begin, I want you to know that I am for you and want you to succeed! I am here to answer any questions you may have. I am here to help you live your best life. To restate the terms found on my website, I do it because I’m passionate about sharing with others what I’ve learned, both my successes and failures. My goal is to promote a positive healthy financial and personal lifestyle for my clients and followers. I have invested very successfully in businesses, real estate and stocks. I love to write. I am not a financial advisor, doctor, lawyer or psychic. My ideas are simply food for your thought to make good decisions. I share my experiences. Ultimately, I want you to use your informed opinion to make the best decision for you in your life. I earn money from my website. (That shouldn’t surprise you. I want you to do the same!) I take security very seriously and having over 18 years experience in Information Technology you can rest assured that I’ll do everything in my power to keep your data safe. The bottom line is, I’m all for you and want you to succeed in life both personally and financially. It all starts with 5 minutes a day!

Day 1 - Getting Started

I hope you are as excited as I am to begin powering down your debt and living your best life.  I know that finances can be boring and seem like a thorn in your side but rest assured I will keep this light and fresh with ideas that you can use from here on out as you master how to get out of debt.  Before we can create a plan for you we need to know exactly where you stand financially today.   Before we do that let me explain some basic financial terms.  You will need to refer to these when you fill out your Personal Financial Statement (PFS).  I'll get to the PFS in a bit.

Here are 4 terms that you should be familiar with.  Learn what they are and what they mean.

Financial Terms You Should Know

  • Asset: An asset is an item of value. Assets can include cash, stock, real estate (if you are not renting), vehicles (if you are not leasing), etc. Money is a liquid asset.
  • Liability: A financial obligation. Any credit cards, loans, debts owed, etc. Your mortgage is a liability as is any other real estate or rental properties that you may own.
  • Income: Any money you receive from your job, rental properties, stocks/bonds, dividends, businesses, etc.
  • Expense: Any monthly living expense. This includes items such as utilities, cable TV, Internet service, insurance (home/life/personal/renters), taxes (property), etc.

* Contact me if you are unsure of  what category an item fits under.  I'm here to help!

Step 1:  Gather Financial Papers

Now it's gathering time.  Time to gather all of your financial paperwork and get organized. Hopefully you have them all in a binder or folders. If you don't then stop here and head out to OfficeMax or Amazon.com and grab one.

We will use all of your financial papers to record the most accurate picture of where you stand on the financial podium. There are no losers on the podium so there's no need to be nervous. We will record your assets, liabilities, income and expenses on your Personal Financial Statement(PFS) and assess your starting point. Then we will determine your NET worth.

Next Step: Your Personal Financial Statement(PFS)

Craig Kelley

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Craig is the author of How to Get Out of Debt and an avid blogger. He strives to help people maximize their time and succeed financially as well as personally. He has been a leader in several start-up companies including Mokumax Virtual Domains & Servers, Inc. and currently HealthcareSupplyChain. Read more...

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  1. How to Get Out of Debt Guide - Part 2 of 6 -5 Minutes a Day - July 6, 2012

    […] that we have gathered all of our paperwork in step 1 we are going to plug our numbers in and crunch them. Actually, I’ll crunch them for you. I […]

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