The first step to digging out of debt is to know your actual total of debt. So many people who I have spoken with over the past few weeks readily admit that they don't actually know what the real number is. If you don't know what you owe, it will haunt you forever because you will inevitably have lingering debt. Sit down, Right Now, as you read this blog and pull out a piece of paper. If you are more of a computer person like me, open up a blank excel sheet. Make a column for each of the following: Debt Name, Total Amount, Monthly Payment. Make a list of every debtor that you owe money to starting with your home, cars, student loans, etc. Pull out the bills, don't estimate, add them all up and know your number. Knowing your total debt is the first step to digging out of the hole of debt that you are in. If you are the one who pays the bills and deals with the finances in your marriage, after you have the list, show your partner. If by chance you are not the one who takes care of the finances, find out the answer to this question and get involved. One partner should not hold the full responsibility of the stress of debt.
In my marriage, I am the one who deals with the bills, checks our finances, moves money to our savings account, and makes most of our financial decisions. BUT, I often ask my husband to sit down with me after I have completed our budget, or from time to time, I give him the bills and have him pay them. I want him to know what we have, what we owe, and where we are financially so that he is just as responsible for the numbers as I am. It helps strengthen our marriage because if the money times are stressful then we are carrying the burden together, and we can make informed decisions together as well.
After you know your debt, you need to track your debt. I currently use mint.com for my tracking, but there are many other programs and ways to do this such as Microsoft Money. On mint.com, I link all of my accounts into the system and it automatically tracks my income and spending so I can check to see how much money over the course of a year that I spent on groceries, gas, restaurants, you name it. Now, it is a computer, so it isn't perfect and you do have to do a little work to make the most of the system. From time to time you need to go in and code the transactions to the proper categories or reclass the items that it coded incorrectly, but for the most part it helps to paint an accurate picture of your spending and areas that you need to address. Just in using this program, I was able to find out that we have a problem with our spending in the area of Food and Dining which is why it is a major focus of mine. In some months, we are guilty of spending almost $2,000 on food and dining which encompasses groceries, restaurants, fast food, etc. All I could think when I saw some of those numbers is, "That is ridiculous, we should be obese with that much money spent on food." As it is, we love to eat out, snack out, and overall eat anywhere but in our home. That is why we have vowed to make a change.
Especially now that we have children, we have realized that if we spend a little bit more on quality foods at the grocery store, we can have a really nice dinner in, after the kids have been put to bed. So this week I purchased 2 NY strip steaks from Publix because they were on sale. Paired with the broccoli that was on sale at Kroger and 2 Baked potatoes w/ butter and sour cream, our entire meal will total $14.12. Pretty cheap for a date night I must say, and my husband really enjoys cooking our steaks on the grill which makes for a great dinner.