Budget, Debt Reduction

Hit The Brakes – Get Real About Your Debt

This article is step 2 of the Hit The Brakes – Get Real series.  I encourage you to read step 1 – Get Real About Your Expenses.

In this series, we’ll examine ways to stop adding to current debt balances, create a basic budget, and begin the process of moving forward with a solid debt reduction plan.

Now that you have a list of next month’s expenses – it’s time to get real about your debt.

You’ll need access to your latest account balances.  You may need to log in to your online accounts and / or gather up recent statements.  I use Mint to track my various accounts and to manage our household budget.  It’s a cool tool – something you might find handy as we move forward.

I have created a couple of   worksheets – one for listing debts, the other for listing expenses.  I used worksheets very similar to these when I was creating my own debt reduction plan.  Remember, keep all documents related to personal finance in a secure place.  (These are Word files.)

Summary of Current Debt and Summary of Current Expenses Worksheets

Make a list of current creditors, account balances, minimum payments, interest rates, and payment due dates.

Quick side note – I am not a financial professional.  I’m just a dude who hates debt and wants the world to be debt free.  My approach, by design, is simple.  There are thousands of other sites, many written by friends of mine, with tons of detailed financial information.  I write for folks like me – people who want to get out of debt, save some money, and be in a position to bless others.  Now, on with the article!

You have your list of creditors and account balances – and now you are at a point where you can begin to do something about your debt – as a whole.

Add up all of those account balances.  That’s how much money you oweif you could pay off all of your debts, today.

Obviously, the goal is to reduce – and one day eliminate – all of our debt.  To do this, we must first stop adding to those balances.


When I decided to get out of debt, I did three things to avoid adding to my account balances –

1.  I stopped using my credit card.  I simply placed my card in the back of my wallet – and stopped using it.

2.  I stopped all auto-payments from my credit card.  I know, I know.  This is old fashioned.  For me, however, this was necessary.  I had several payments, including my cellphone bill and satellite t.v. bill auto-paid via my credit card.  Each month, a couple hundred dollars was automatically tacked-on to my already high balance.  By stopping these auto-payments, I stopped adding to my balance – AND I took another look at my bills.  Win-win.

3.  I committed myself, fully, to the process.  I didn’t leave any room for self-compromise (that a term?).  Instead, I jumped in – determined and ready to make big changes.

So – after step 1 and step 2 – We have a list of next month’s expenses.  We also know where we stand, in terms of creditors, account balances, and how much we owe.  We are committed to the process – and ready to stop adding to those account balances.  We are almost ready to create our debt reduction plan.  See you guys soon with step 3!

4 thoughts on “Hit The Brakes – Get Real About Your Debt

  1. This is a good website, 1 thing I hate more than standing in a long queue is debt. I am on a personal mission to try help people I know from getting deeper into debt. I got a substantial amount of my own but it is coming down slowly but surely. Spend less than you earn and dont spend borrowed money.

  2. Great tips! If you really want to manage your finances, you need to fully commit yourself in the process. It is not easy but it is achievable. Keep track if the payment due dates of your personal loans or credit card bills so that you won’t have to worry about paying penalties for late payments.

  3. Great tip on stopping the automatic charges on the credit card. I completely forget about a couple of the charges and wonderful why my balance has increased and of course made money for the credit card company.
    Going back to old school of spending what you have and not more based on the credit swipe is a good strategy.
    I need to be more frugal. It’ll be my resolution for 2013.

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