Each Monday morning, I plan to post my thoughts on Organizing Your Finances. Through this series, I hope to share a tip or two that address a common problem that many of us face in our daily lives — that of organizing our finances. I’d love to hear your thoughts on this initiative and would love it more if you could share a tip of your own. And, as always, do spread the word if you find this useful.
I thought I’d begin this series with one financial aspect that’s common to most of us in today’s world — financial debt. As a first step towards organizing your finances, you need to first know what you owe. Since financial debt can arise from various sources, here’s what you should do to get a complete picture of your debt:
- If you have credit card debt, gather the latest statement for each card.
- If you have unsecured loans (personal loans, education loans, and such from financial institutions), gather the loan amortization schedule for each such loan.
- If you have secured loans (home loans, vehicle loans, and such from financial institutions), gather the loan amortization schedule for each such loan.
- If you’ve taken a loan from friends and family, make a note of each such loan on separate sheets of paper.
- If you’ve signed a guarantee for someone else’s liabilities, make a note of each such guarantee on separate sheets of paper. Though you’re not making the payments right now, you need to be aware of what you’ve guaranteed.
Next, file all the above documents together and name this file “Debts and Liabilities.” This will give you a complete picture of what you owe — to others. You can then take the next step — preparing a debt repayment plan.
What about you? Do you already have a complete picture of your debt?