A Debt Checklist

A Debt Checklist is the only sensible way to organize and control your finances. Most people arent actually aware quite how much debt they possess - in fact, a recent survey found that almost 75% of UK adults were up to £5000 out when asked to estimate their non-mortgage debt. They werent much better when asked to produce a cashflow statement showing how their hard earned cash was being spent each month! A Debt Checklist is a plan you can use to get a grip on your finances, and will allow you to understand in black and white, where savings can be made, and how debt can be tackled most effectively.

Obviously, you will have a savings account. If you DONT, go open one now. Choose a large, reputable bank or loan company so you wont have any problems getting access to your funds when you need them.

Secondly, you need to cut back on your credit card spending. Credit card companies do everything they can to encourage you to spend, and even more to try and cajole you into only paying off the minimum each month, making credit cards the MOST expensive way to borrow money you are ever likely to come across. If you find yourself paying for small items with a credit card, you are asking for trouble. Not only will you be that annoying person in the front of the grocery queue at Walmart paying by card, but you will also rapidly lose ANY idea of what you have spent, and where. Debit cards are SLIGHTLY better than credit cards for these small purchases, but not much - you will still face a terrible temptation to spend more up to 50% more than paying by cash, if recent surveys are to be believed!

You MUST pay more than the minimum payment each month - if you dont your debts will be around for a LONG time! It can take over 20 years to pay off a measly $1,000 credit card bill if you simply pay the 2% minimum each month. At the end of this, the interest payments you have made will FAR exceed the original debt! And that, of course, is how credit card companies afford those swanky downtown offices.

If you have dependents, you need insurance. It may seem like an extra cost right now, but believe me, it is Murphys Law - if you dont have it, you will need it imminently! Auto insurance, Mortgage Payment Protection, house insurance and life insurance are a basic set you need. This point is related to pensions, too. Start as early as you can. If you dont have a pension plan now, start it immediately. The tax advantages just cant be missed. And the earlier you start, the sooner compounding has a chance to work its magic. And compounding is the secret that will determine if you have a comfortable retirement, or live in a shack, eating beans. And dont try and kid yourself you wont make it to old age - bet you will, and bet you will be surprised how expensive everything is in 30 years!

Read up on money, and money topics. If you understand how cash works, the chances of getting into serious debt decrease dramatically. Im not saying you have to read the Wall St Times, but an understaning of interest rates and compounding wont hurt.

Thats about it for now - Get saving!