Updated: Jan 16, 2020
This is the NO-Fun but crucial step that will help you know where you are with your finances. This is the step that you should take seriously, because this is your reality of where you are at today. If you don’t know where you are at, how will you know where to go? How much do you owe? Do you have 20% to put down on a home or are you at the lower end? Can you afford the bills you’re not use to paying such as home insurance or garbage service?
Go to a site like www.CreditKarma.com and create an account if you don’t already have one. In my experience, this site doesn’t affect your score and will tell you everything (if not most) of what you need to know. Here are some things to look at:
1. Your score. High 600’s is OK, 700’s+ is better. The better your score, the better your interest rate.
2. What you owe and to whom. Highlight and print this part out, you will need it shortly. This is the nitty gritty of where you are starting. If you owe a lot and/or your score is low, that will be your starting point.
You now know where you are and you now know where you need to get to. There is a system that I have used and LOVE. I have used this system to get 100% of my bills paid off in full (it was GREAT!!!) and I am currently using it again, right now. This system is called the Snowball Method. There is another way that you might like also called the Avalanche Method.
To do the Snowball Method, you would list ALL your debt from lowest balance to highest. You then pay minimum payment on all your bills but the very lowest. On the lowest you pay over minimum, even if it’s just a little extra above minimum until it is paid off. Now you have one bill paid off. You now take the money you were used to paying on the old bill, and apply that, along with the minimum you have been paying to the next lowest bill until that is paid off. You will keep adding all the money you have been paying plus the minimum to each bill, one at a time, lowest to highest, until your bills are gone.
A simple example, you have 4 bills. Each minimum payment is $10. The lowest bill you decide to pay $15 instead of just the $10 minimum. When that is paid, you go to the next bill, you take the $15 you were use to paying on the first bill and add it to the minimum you are paying, so you would be paying $25 towards that bill until its paid off, then $35 to the 3rd bill….. Get it?
The Avalanche Method works similarly, but it goes by the highest interest rate to the lowest. Logically this way makes more sense, but I like the Snowball because you are seeing the results faster and it will keep you more motivated.
If you have Microsoft Excel, I found a free Snowball Method download from a great site called Life and My Finances – you can get it here https://lifeandmyfinances.com/2016/12/how-the-debt-snowball-really-works-free-tool-included/
I know this is almost painful to some. It is to me, but it’s like facing your fears. Just do it. I promise if you follow through with the tips that I give you, you will reach your goals. Remember, it’s the small steps along the way that will get you from here to there. (There is more, like you need to have some credit and other things – we will get there. Baby steps)
So far, you found out your Why in Day 1
And we understand where we are and taking an action.
If you liked Day 2, make sure you subscribe so you don’t miss a day. Remember, if you need help with selling or buying a home, or have any Real Estate questions, call, message or text me 708-278-6996
Til next time,
Managing Broker/Owner of KamBri Realty, LLC