Money & Career

How to be debt-free in just one month!

A four-week guide to making your money make sense

money advice, debt-free, financial plan

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If you’re steeling yourself to open credit card bills, get back on top of your finances and jump-start savings with our handy week-by-week money guide. Just follow these suggestions and in just one month, you’ll feel a whole lot better about where you stand.

Week One

1. First things first. It’s time to ask yourself some important money questions. There’s no point in embarking on a path to, say, debt reduction, without understanding what motivates you to spend. So ponder the following:

•  How did my parents deal with money? Am I following the same path?
•  How do I make financial decisions? Do I research and read, ask others for opinions, or go with my gut?
•  How do I feel when I shop? Anxious, neutral or exhilarated?
•  What do I find truly important in life? More friends? A cottage? Wall-to-wall shag carpeting? What would I need to do to make it happen?
•  How do I picture myself at 65?

2. Get it together. Married or in a serious relationship? Ask your partner to answer the same questions and compare results. Use the information to blaze a trail together.

Week two

1. Cut the clutter. Are your financial papers a mess? Take a few hours this week and break it up into easy 30-minute chunks – sort, file and throw away. It’s a hundred times easier to know where you stand financially if you know where all the bodies (and bills) are buried.

2. Track your spending. The first step in building a spending plan (let’s not call it a budget, shall we?) is to keep track of your spending habits for at least a week. Include everything from daycare costs to dry cleaning bills. If you can’t stand writing everything down with a notebook and pen, collect receipts instead. Whatever works.

Week three

1. Know what you owe. If you’ve been letting the numbers creep up on your credit cards, lines of credit or within consolidated loans, be ready for a shock. But don’t despair.  By understanding how much debt you have, you’re making a first step toward driving it back down. Look at all your debts including outstanding taxes, car payments and student loans. Then add them up.

2. Set a budget battle plan. Now that you know where your money is going and how much you also owe, it’s time to come up with goals for paying down debt and saving up for later. Want to eliminate your Visa bill by August? Set up a payment plan online with your bank. Or open a high-interest savings account and pump money into it automatically each month. These tasks take less than 30 minutes, but will pay off big time.

Week four

1. Establish a bill paying system. Do your bills languish in unopened piles, or do you simply forget to pay on time? This year, designate one area of your home, “Bill Central” and make a plan to pay them each month. Write “pay bills” twice each month in your calendar.

2. Join a money club. You don’t have to be a financial wiz to participate in a money club. Just grab a few people who want to get their finances back on track and meet once a month. Those frequent check-ins keep everyone sticking to their goals.

Want to learn more? Grab a copy of Chatelaine’s Earn, Spend, Save for a full six-month money plan.

Kira Vermond is a freelance writer and author of Chatelaine’s own Earn, Spend, Save: The savvy guide to a richer, smarter, debt-free life (Wiley, 2010). You can also listen to her career and money advice on CBC Radio weekday mornings across Canada.