Search Results for: budget

Are You Tracking Your Debt?

January 9, 2013 By Shane Ede 5 Comments

I think we can all agree that most debt is bad. Some of us might even agree that all debt is bad. Nearly all of us will also agree that nearly all of us have debt. It’s not a comfortable thing to have usually, and, since you’re reading this, I can only assume that you’re dedicated to paying it off like I am.

Like the debt conquistadors before us, we’ve learned that knowing your debt is key to besting your debt. You can’t win a race without knowing where it starts and where it ends. But, somehow, you’ve also got to be able to track yourself along the way. You’ve got to track your debt, and track your progress in paying it off.

Many of my indebted blogging friends have gone so far as to track their debt on their blog. Many of them have even gone so far as to create a nice progress bar that we can easily see how far they’ve made it. I don’t do that. Not because I’m embarrassed by the debt, or the progress we’ve made, but because I decided years ago that I wanted to keep it private. You don’t need to know how much debt I have any more than I need to know how much you have. We aren’t in a race against each other, and I surely don’t want anyone feeling badly about how much debt I have and trying to catch up. 😉

No matter how you go about it, keeping track of your progress as you pay off your debt is important. If you’ve been reading Beating Broke for long, you’ve probably gathered that I’m a fan of budgets. I think they’re a useful tool to help people like me keep track of what they spend and where they spend it. Budgets have helped me get control of my finances and move them in the right direction. So, it’s only natural that I use my budgeting software (YNAB) to keep track of how much I owe and where.

There are tools all over the place to help you track your debt. One of the sponsors of the Debt Movement, Ready for Zero, is a great tool to not only help you keep track of what you owe, but to also help you plan how you’ll pay it off. Tools like Mint also do a really good job of giving you an online tool to track your debt (and other accounts). I don’t use any of them. Mostly because I haven’t come across one that actually connects to all of my accounts. My local accounts at a credit union that is small enough to not be fully integrated (I guess) with the services that those sites and apps use to update accounts.

If you want to go really frugal, a simple spreadsheet can do the trick. Just list out all of your accounts, how much you owe on them and then update it as you make payments. Want to make it fancier? Track them monthly, then make a colorful line graph of your progress.

It doesn’t matter what tool you use. The point is that you track your debt. Know where you started with your debt, and then track your progress as you make your payments and pay it down. Even if you aren’t paying off accounts every month, it helps with motivation to keep going.

How do you track your debt?

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Knowing Your Debt is Key to Paying Off Your Debt

January 4, 2013 By Shane Ede 7 Comments

Any good anti-debt blogger (like me!) will be able to tell you all kinds of ways to pay off your debt. There’s methods, and tips, and even a certain way to hold your nose. Ok, maybe I’m kidding about that tips bit. Or is it the nose part? I’m confused. Seriously though. There’s a debt snowball, made famous by Dave Ramsey, then a debt avalanche, then a debt blizzard, and so on.

But, the one key thing that you absolutely have to have if you want to pay off your debt is knowing your debt. You’ve got to know the number, the type, and even the method of your debt. If you want to overcome your debt, you’ve got to know it inside and out, upside and down.

How Much Debt

Just how much debt do you really have? If you’ve do a budget regularly, (if not, start) take the time to write down how much you owe to everything you make a payment to. Keep in in a spreadsheet and update it periodically. Put a big bold total across the bottom. Is it a high number? Use that as motivation to pay it down. Is it a low number? Use that as motivation to finally get rid of it all! Watch the total get smaller and smaller. (If you’re an spreadsheet junkie, create a line graph for the total!)

What Kind of Debt

There’s a common argument over whether there is any such thing as good debt, or if it’s all bad debt. I happen to think that argument is a little too black and white and that it really depends on your situation. If you know how much debt you have (see above), now you can categorize it. This really isn’t as hard or as complicated as it sounds. We’re talking simple categorization here. Is the debt on a credit card? It’s credit card debt. A mortgage? Mortgage debt. Car loan? Car debt. Put them all in a category, and total the categories.

How Did you Get Your Debt

This is going to sound silly, but now take a hard look at your debt and decide how you got it. Some of it will be obvious. You got that mortgage debt by buying a house. The car loan by buying a car. But, I also want you to go a bit further. Did you buy that car (or the house) because you absolutely needed a car? Or did you buy it because you had gotten bored with the old one? Categorizing your credit cards this way will be a little harder. It might be easiest to go through old statements and look at purchases. What are those purchases? If you’re buying groceries and other small priced consumables on your credit card, but not paying those charges off right away, that’s a good sign that you have a problem. Determine why you’re spending the way you are, then find a way to fix it.

Now, Get Rid of Your Debt

Now you know how much debt you have, what kind of debt it is, and how you got it. Let’s get rid of it. If you’re comfortable sharing your totals (even anonymously), joining something like the debt movement can be a great help. There’s tools out there that can help you, like Ready for Zero. If you want to go it alone, here’s a simple method for starting. Go back to the list of categorized debt. Start with the category(-ies) that are un-secured (that means they have no asset like a car or house tied to them) and start paying those off with every spare penny you have. You can sort them largest interest rate to lowest interest rate, or smallest balance to largest, or however you want, really. Just start paying them off. Get them taken care of, then start on the smallest of the secured (tied to assests) debts. Rinse, recycle, reuse, repeat.

If you feel like sharing, tell us in the comments below how much debt you have. How much have you paid off?

How Much Car Insurance Coverage Do You Need?

December 8, 2012 By Shane Ede 8 Comments

Car insurance, like most insurances, can seem complicated. Deciding just how much car insurance coverage you need is the biggest hurdle. Of course, it’s easy to select the coverage that meets the requirements of your state and the lien holder (of you owe on a loan for the car, you’ve got a lien holder, and it’s likely the bank you borrowed from), but those aren’t the only factors to take into account when deciding on how much coverage you need. Using a free online service can quickly find cheap auto insurance companies and shows multiple competitive policies. In the end, you’ve got to find a coverage that will meet those requirements, and also fit within your budget.

State Requirements

You’ll want to know what the state requires you to have for insurance. Any local insurance provider should be able to tell you, but you’ll want to double check if you’re planning on using an out of state or online provider. If you still owe on your car, the lender on your loan will likely require that you have full coverage, so the state minimums will likely only come into play if you own the car you’ll be insuring.

Lien Holder Requirements

If you owe on your car, you’ve got a lien holder. The lien holder is whomever you borrowed the money from. Most (if not all) lenders will require that you carry full coverage insurance on the car. It has nothing to do with them wanting to make sure you’re safe, and all to do with making sure that should you get in an accident, that they’ll get some of their money for the loan. While most lien holders won’t require a certain level of insurance (over full coverage), it is a good idea to find out what they require just to make sure that you’re getting the coverage that you need.

Deciding on Coverage Levels

Once you know the requirements of the state and any lien holders, you’ve got to decide on the level of car insurance coverage you want. There are two ways to look at this. The first is that you’ve got to find a coverage and provider that is affordable enough to fit into your budget. The second is usually the forgotten way of looking at insurance. The coverage doesn’t just have to fit into your budget, it also needs to cover you against a total loss. If you have full coverage, but it’s only enough to cover a portion of what you owe on the car, you’ll also want to look at something that’s usually called “Gap Insurance”. Gap insurance is aptly named in that it is designed to cover any gap between the value of the car and the remaining loan should the car be totaled before you pay it off. Car insurance can be a combination of three coverages. A liability coverage (usually what States require), Comp & Collision, and personal injury. The exact levels that you need will vary based on your situation, but your insurance provider should be able to make recommendations for you.

How Much Deductible for Car Insurance

One of the easiest ways to lower the monthly cost of your car insurance coverage is to raise the deductible on your policy. This method is a bit of a double-edged sword, however. Raise it too high, and you might not be able to afford to have the car fixed. Or, anything short of a major collision may fall under the amount of the deductible. Again, your insurance provider should be able to help you compare the different deductible levels and help you find one that fits your budget without breaking you if you get in an accident.

The level of coverage that you need is going to be drastically different based on your own individual situation. Do you own your car, or owe on your car? Do you have sufficient savings to cover a higher deductible in an emergency? What are the requirements of your state and any lien holders? Make sure you know all that information before you go looking for car insurance, and remember to double check any suggestions by an insurance provider. We’d all like to think that they are all honest, but not all of them are. Knowing at least a little about what you’re talking about, and the information required to ask informed questions is a huge step towards not getting taken advantage of.

How much do you know about car insurance? How much have you learned since the first time you bought insurance?

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