Get Organized Week: How to Make Sense of Personal Finances While in Debt

Ok, you have arrived at a conclusion, regardless of it being Get Organized Week, that you need help organizing your personal finances. Quite likely, your personal credit card debt issues are the driving factor to your desire for change. Congratulations on taking the first step to improve the quality of your life, and your personal well-being! Those in dire financial straights often find that depression sinks in.

The feeling of being disconnected from friends and society surely takes its toll. Fear not! All is not lost, and help is closer than you think. Our new website at Golden Financial Services offers hassle-free debt relief help. If organization is really your main challenge, here are some commonly asked questions to consider, with some help to get you moving forward.

How Do I Organize My Personal Finances?

We’ll first answer this question with another question, embedded with an answer: Have you actually calculated *every* monthly expense you have, and put it in some form of either an online document or a physical sheet you can reference quickly? For example, Golden Financial Services offers a re-usable Debt Calculator that allows you to input every expense you have, then calculates your total monthly commitment. In addition to simply calculating your monthly debt commitments, the practice of seeking out all possible expenses trains you to understand where your money is going every month, on a microscopic scale. 

In addition to free online calculators, there are online tools to help you move your paperwork into a digital solution for easier navigation. Build a monthly timeline for when you receive your bills, and when you will be able to pay them; this is often based on your paycheck cycle and knowing what paycheck will cover what bill. Creating an Excel sheet or maintaining a Sheet in Google Drive is a responsible and sufficient way to do this.

Lastly, Investopedia also provides some general rules in an excellent write-up. Our favorite tip in the blog is about checking in with your bills and budget sheet at least once per month: “Let’s say your electric bill is a $100 more in June than it was in May. Your budget may be based on spring electricity usage or the usage from a month where you had a lower electric bill. Since June’s electric bill signals a change in expenses, you take out your monthly budget to see what other areas of your budget you could adjust so you can pay your electric bill.”

What is a Financial Organizer?

Simply defined, a financial organizer is anything digital or on real paper that allows you to easily view the landscape of your finances in one place. Diligently maintaining this organizer is key to keeping personal finances in order, but support from other tools is also necessary, such as reminders in your mobile device to check your financial organizer. We covered several financial organizers in our Self-Improvement Month blog if you need some inspiration. 

Steps 7, 8, and 9 in this WikiHow piece cover important steps for financial organization. If you choose an online financial organizer especially, you may be able to keep all of your passwords for your various bills in one place. 

Some examples of online financial organizers include NetSuite, Quicken, and Mint.

How To Clean Up My Finances While in Debt?

Here is where things can get a little sticky for those trying to get organized. It is difficult to overcome stress and grief long enough to put a plan in action. Depression can be a monster or even a virus that lives inside you that demotivates you to even remedy the problem. Focusing on attacking your debt is a start, but knowing how to do so is the real path to victory. 

After calculating your debt as detailed above, head over to the Budget Calculator to gauge your true income compared to your total debt. This will lead you directly into the Snowball Debt Payment Calculator. If you aren’t familiar with the snowball payment method, it basically works like this:

1. After taking a look at your credit card debt balances, determine which balance is the smallest, or has the lowest interest rate, and begin to pay down that debt with as much as you can afford.
2. Pay the minimums on all other credit debts
3. As you begin to pay down the smallest balance credit card, you’ll notice that your cash flow will begin to increase as your total monthly minimums are being reduced due to a smaller balance on that credit card. 
4. Don’t use the credit card you are attacking for any major purchases. Keep it with the smaller balance for a rainy day emergency.
5. Once you have paid off the smallest balance card, move to the next smallest and repeat.

While you are practicing the snowball payment method, you should also be building up the structure for tracking the changes in your finances that are happening due to this payment method. Here’s some solid advice from MyMoneyManagement, primarily if you are still using paper statements to track your finances: “It’s best to pay household bills on a weekly basis, although if you only have a few bills, you can pay them bi-weekly or monthly. Online bill pay systems are a great way to stay organized, save money on stamps, and get your payments cleared quickly. Otherwise, you’ll need to make sure that you write and mail your checks well in advance of the due date so that you aren’t charged a late fee.”

How To Organize Finances In Excel?

Not familiar with Microsoft Excel or Google Sheets? Millions of people use these apps and tools on a monthly basis to manage their finances because the platforms come with easy-to-use formulas to automate your math. In addition to this handy video walkthrough, here is the basic framework for setting up something like this:

• Create a column with ALL monthly expenses, even down to $5 subscriptions, haircuts, groceries, etc.
• Create a column with ALL sources of income, and split it out by paycheck sums and timing for each month.
• Use the AutoSum function, =SUM(cell range) to tally all the expenses at the bottom of the column, then repeat to tally all income sources. These cells are now side-by-side, an easy comparison to visualize. 
• You can extend this math by calculating on a 12-month rolling income in order to determine the length of payments remaining for things like a vehicle or a mortgage payment.
• With all of this input in your Excel or Google Sheet, you can update it monthly for any changes while also calculating what you can afford to pay toward credit debt.

If you found our blog looking for financial advice or assistance with credit card debt relief or debt consolidation, call Golden Financial Services today at (866)-376-9846 or info@goldenfs.org. You can check out the rest of our blog here, and do your research on our services here. Let’s talk soon!