So, first before we start thinking about our financial goals, it’s important to see where and how much debt we have. And I know it’s scary to actually see this number. Once, you get better picture, the easier things will be for us to make these changes in our lives.
In case you missed out on my blog post from two weeks ago, called Statement of Net Work, http://threeyellowdaisies.ca/2020/07/27/statement-of-net-worth/ I began asking you to write down in a journal or in a personal document what you owe and own. If you are stuck, here’s a list of ideas of what to include;
- Credit cards
- Overdraft (not the amount available, the amount you owe)
- Students loans
- Line of credit
- Other loans
- Money you owe family and friends
Once you have an understanding of how much you owe, you can then begin working towards paying down your debts.
For some, they might choose to start paying down the one with the highest interest, others may decide on paying their lowest debt, to just get rid of it.
Personally, I feel like it’s best to make payments on the smallest debt first. Because when you start making payments on one debt, you’re building momentum to continue paying off the rest of your debt.
It’s important to continue making payments on your other debts, too. But try to begin setting aside extra money every month for your smaller debt, to help build your momentum.
Once you have decided on which debt you plan on focusing on, you can begin to make goals for yourself with how you are going to set aside your money.
Perhaps your goals, aside from being debt free, are…
- Build an emergency fund
- Save up money for a vacation (with family, or significant other)
- Buy a car
Of course, many of these things are take time, but once you start thinking of these goals, use this as motivation to pay off your debts.