As promised, to help couples get out of debt faster I’m creating a new series that will take you step by step through the process. Over the years, between our personal experience with paying off the car loan and discussing with other couples about becoming debt free, I’ve found that there is an effective way for the two of you to reach your goals. It comes down to:
Know How Deep Your Debt Is
Review Debt Methods as a Couple
Choose the Method that is Easiest to Keep
Build Up Your Debt Payments
Make It Automatic
Today I’ll talk about how you can run the numbers on your debt. You can’t completely get out of debt unless the two of you know exactly how much debt you are currently in. The problem for some couples is that over the years they’ve accumulated quite a bit and it’s hard to get it organized.
Looking at the Numbers Objectively
One of the best ways to get a handle on your debt is to see which part of your budget is triggering the money leak. That means you two will have to look at all of your income and expenses for the past month (or longer if you have the data).
Free Tools to Automatically Get Your Numbers
You can always dig through your bills or take time to login into all of your accounts to get the data you need, but there is a way to streamline the process so they two of you can get an accurate snapshot and have a easy and quick way to track your progress.
Personal Capital: This is now my favorite money management site to use on tracking our finances. You can also get a free portfolio check-up to make sure your investments are aligned with your personal goals.
Mint: We’ve use them for years as we tracked our net worth. With a few clicks you can check month to month compare them against each other. You can also drill down to get to the individual transaction.
Finovera: The company is hoping to take money management a step further – giving users not only the ability to see their budget, but also manage their bills AND store their financial documents in one place. After you link your bills into Finovera, it pulls 12 months of history and tracks averages. That gives you a snapshot of where you are with your monthly expenses.
Another big advantage of using the tools I’ve mention is how you’ve now created a system where you two can be kept in the financial loop without tracking every cent manually. It’s very handy for monthly reviews.
Blame Free Zone
With the hard numbers in front of both of you, it’s time to start talking. As you look at the biggest trouble spots, resist the temptation to blame one another. It will mostly likely have the two of you fighting each other instead of the debt. A much better use of your time would be to focus on the top one or two areas to improve on (ideally you each pick one that you can be in charge of).
Coming Up with a Debt Pay Off Plan
Now that you have both the grand total and individual amounts of debt, you two are ready for the next step – choosing a plan to get out of debt. I’ll be covering some of the most popular methods out there on the next installment of the series.
Photo Credit: seanmcmenemy
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Elle Martinez helps families at Couple Money achieve financial freedom by sharing tips for reducing debt, increase income, and building net worth. Learn how to live on one income and have fun with the second..