SavingsPinay Series | Day 3: Organisadong Pagbabayad ng UtangOctober 28, 2015
The SavingsPinay Series | Ayoko sa Utang! 5 Days To Be Debt-Free For Life is created and published first in this blog. Visit this LINK for the past SavingsPinay Series.
Day 3 | Organisadong Pagbabayad ng Utang
If you want to pay your debt fast then you need to learn the value of being an organized person. The truth is being disorganized can cost you a lot of money. You will be bombarded by penalty fees due to late payments because you can’t find the bill. If you ever missed a payment., interest rate may be higer the next time you pay. Disorganization can also make a big impact in how consistently you make your payments.
I am always honest how I consider myself as one of the most disorganized person. I have receipts all over my bag and my desk. I only kept a record of my bills and spending using my DIY Spending Tracker. However, people who are in the middle of debt payment journey must adopt some organization skills.
The key to have an organized way in paying your debt is to understand your starting point. This is the reason why Day 1 Evaluating Your Debt is so important. This is where you’ll have a clear picture in how much you owe, when it’s due and how much the interest rate will be.
Paying off debt will be an overwhelming, exhausting and at some point depressing situation. That’s why being organized is important. You don’t want any clutter or missing bill or receipt to give you a bad mood. Here are five simple steps that you can organize everything that needs to be organized as you pay off your debt.
1. Make a List of Your Debts to Pay
Grab a pen and paper and list down all your debts to pay. This is the same tip that I gave during Day 1. Create columns for the following fields: Balance, Payment Date, Minimum Payment, Amount Paid and Expiration Date. You can also research on a better spreadsheet or template to use. Once the list is done you are now ready for step 2.
2. Classify Your Debts
This step is crucial so you have a concrete overview of your debts. Take a good look at your debts abd try to categorize them. You can group dents that you are currently paying, debts that you have neglected to pay and debts that have high interest rate.
3. Prioritize Your Debts
Now that you have already made a list and categorized you can now start creating your Debt Payment Method. Deciding which debt to pay first will be very hard so take time to make a choice. Below are three ways you can prioritize the debt you have to pay.
- Pay the debt with the lowest amount.
This is also known as the Snowball method which suggests that you prioritize paying your debts with the least money or interest rate involved. This gives you satisfaction as slowly but surely your list of debts are getting smaller. The small wins can also motivate you to commit more in your goal.
- Pay the debt with the highest interest rate.
This is now known as the Avalanche method. Here you are getting rid of the debt that has the highest interest rate while paying a minimum amount on your other debts. Once you are done with the highest interest rate debt you can now move on to the next highest until all your debt is gone at last.
- Pay the debt that gives you much agony.
Releasing your emotional stress as you pay dent is possible by paying the one that gives so much agony. This maybe the debt you accumulated on Five-Six, thinking of how hassle it is when the maniningil comes to your door as always. You can also do this by paying your debt sa kamag-anak first.
4. Be Mindful of the Situation
Do not be discouraged with your debts. You can do it. It may not be today, tomorrow or next week but it will be done. After all, money is the easiest problem to solve as there are a lot of possible ways to get rid of it.
Izza of SavingsPinay promotes financial literacy for the young and young at heart by providing insights and tips on budgeting, saving, investing and online entrepreneurship. Aside from this blog she also writes at www.izzaglino.com, a beauty and lifestyle blog for frugal Pinays and manages, www.izzagevents.com, a wedding and event business since 2011. For inquiries, topic suggestions or future collaborations email her at firstname.lastname@example.org