Ladies - Are You in Debt and Don't Even Know It?

Many women think that because they are managing to pay their bills and nobody is knocking on the door to take their stuff away that they are not in debt. Think again! 

To find out if you are in debt, you must calculate your net worth. Simply subtract the total liabilities from the total assets. For this exercise, it doesn't matter how big or how small the number. It doesn't necessarily matter if the number is negative. Your net worth is just a starting point to have something to compare against in the future. Repeat this process at least once a year and compare it with the previous year's number. By comparing the two, you can then determine if you are making progress

To Calculate Your Assets

• Start by listing your largest assets. For most people, they could include the value of their home, any real estate properties, or vehicles like personal cars or boats. In the case of a business owner, this list would also include the value of their business, which has its own more complicated calculation. Make sure you use accurate estimates of market values in current dollars.
• Next, you'll want to gather your latest statements for your more liquid assets. These assets include savings accounts, cash, CDs, or other investments such as brokerage accounts or retirement accounts
• Finally, consider listing other personal items that may be of value. These could include valuable jewellery, coin collections, musical instruments, heirlooms, or a rare wine collection. You don't need to itemise everything, but you can try to list items that are worth $500 or more
• Now, take all of the assets you have listed in the first three steps and add them together. This number represents your total assets

To Calculate Your Liabilities

• Again, start with the major outstanding liabilities such as the balance on your mortgage or car loans. List these loans and their most current balances.
• Next, list all of your personal liabilities such as any balance on your credit cards, student loans, or any other debt you may owe.
• Now, add up the balances on all of the liabilities you listed above. This number represents your total liabilities.

So What is Debt? 

As per Merriam-Webster, debt is an amount of money that you owe to a person, bank company etc. It can include the amount borrowed and interest accumulated. Debt can include credit card debt, mortgage debt, car debt, student loans etc. 

You can get out of debt if you are committed and diligent. It may take a while and if you stay focused on your goals, the rewards will be worth it. 

Here are a few tips that can help. Pick one, two, three or all four. The faster you work at this, the faster you will succeed. 

1. Control your expenses 

Since you have little control over the amount of money that comes in, you have to control the money that goes out. 

• List all your current income streams
• Make a list of all of your monthly expenses 
• Compare your income to your expenses 
• Stay on track and avoid any new debt 

2. Reduce spending on Credit Cards 

One way to get out of debt is to stop using your credit cards. The easiest way to do this is to keep them in the freezer and only defrost them for emergency situations

3. Lower Your Interest Rates

Credit cards have unbelievably high interest rates and you end up paying more in interest than the original amount you borrowed. You can get credit card companies to lower their interest rate. You just have to call and ask. 

For example: 

• On a $5,000 balance and you paid $150.00 per month at 20% interest, it will take you 50 months to get rid of your debt · You will pay $2,359.09 in interest. 
• On a $5,000 balance, if you paid $150.00 per month · 16% interest, it will take you 45 months to get rid of your debt · You will pay $1,656.82 in interest. That's $702.27 less! 
• And talk to your bank manager about the interest rate on loans and mortgages. If you don't ask, you will never get, as they will surely not offer. 
• Check out the different kinds of mortgages to see which one is better suited to your current situation. Ask about Variable Rate vs Fixed Rate Mortgages. 

4. Double Up On The Minimum Payments

It is amazing how much you can save by this one tip alone. For example: 

• If you pay the minimum on a $5,000 debt, it will take you over 300 months to get rid of your debt. You will pay over $9,194.47 interest
• If you pay double the minimum on a $5,000 debt. It will take you 120 months to get rid of your debt and you will pay $2,445.32in interest. 
• That's 180 months (15 YEARS) and $6749.15 less! 

I know you will tell me that you continue to have balances on your credit card because you usually don't have any free cash left after you pay all your bills and the minimum credit card payments. You must review your income and expenditure every month and find expenses that you can cut out. 

Every time you can do this, use the extra money to double up the minimum payment of the credit card with the most debt. Once that card is done, then do the same for the next card etc. 

For mortgages, consider making bi-weekly payments instead of monthly payments. Take a look at this example: 

•  You have a $200,000 mortgage with a Fixed rate at 7% on a 30 year term
•  If you have a bi-weekly mortgage payment, you will save a total of $68,925 in interest as opposed to making one payment a month.

 5. Debt Counseling 

If you are really overwhelmed with the very idea of getting out of debt, there are many government agencies and organisations that offer debt consolidation, debt relief plans and counseling to help you. They can help you avert bankruptcy and be free of collection agencies. They can get you down to one monthly payment for all your debts (make sure they are legitimate and operating in your best interests)

Because we all deserve to be financially free

Article Source: https://EzineArticles.com/expert/Carol_Ferguson/323793