Now that I am ready to build my dream home of being financially free and independent, I had to stop and ask what is the priority to achieving this goal? The answer was and is to become debt free ASAP! Being debt free is my singular focus right now. Sticking with the building a house analogy, being debt free is the frame of my dream home. The foundation is knowing how much I owe. To lay the foundation I need to clear up the ground and make it ready for the pouring of the concrete. All that means is I have to de-clutter and face the music. After I get the frame up for my dream house, I can reassess other financial decisions and make adjustments where necessary. For me that is the installing the insulation and dry wall.
In order to be debt free I have to figure how much I owe. This is the scary part for most people and is definitely uncomfortable for me but I have to complete the task before me. Since this is my second time getting rid of debt, the fear of it is gone just some intimidation is lingering.
Step 1 Clear The Clutter
On several occasions I de-cluttered my space and felt that freedom of being clutter free only to find a pile of papers a few weeks or months later. If I really want to get out of debt I have to find a system of paper filing that works best for me. I know a few professional organizers and shall call them to get some suggestions. However, for now I need to get rid of these piles of papers to find out how much I owe. If another pile creeps up into existence I will roll up my selves and eliminate it.
Step 2 Tackle One Bill At A Time
After getting rid of trash, sorting like with like, throwing away duplicate bills and paperwork, putting papers in chronological order, creating files and filing them away, I decided to review one account at a time.
Step 3 I Owe That Much, Really?!
As I reconciled each account, to be sure what they said I owed was correct, I created a tally for each account.I only tallied accounts that were not on going and were 90 days or more past due. For accounts that were on going, like my phone bill, I tallied amounts that were 90 days or more past due. This will take some time but I will complete the task. When the tally is done I will share how much I really owe.
Step 4 Step Up Payment Plans
Meanwhile during the tallying process and before I got my job one bank was calling and sending me collection letters (I call then Love Letters). I didn’t hide from them. I told them the truth I don’t have any money for you. After I interviewed for my current position, I called the bank to ask about a payment plan. In that conversation I learned all about their debt repayment programs. By the time I hung up the phone, I felt empowered that I could pay them off. Once I got the job I called the bank, got on the best repayment program for me and set up payments. Whew! I still have other accounts to take care of but that was a major accomplishment.
I hope from my real life example you can use these simple steps to get the foundation laid on your dream financial house. Please share your comments and other ideas. Click here to read the next entry on this journey.