Facing Your Finances is very akin to facing your fears. The unknowns of where we are financially can invoke fear that results in avoidance. Financial fears are usually shaped by the thoughts of unpaid debts, medical bills, collections that we’ve ignored and late payments that we don’t want to see consolidated on one report.
If you’ve been avoiding realizing your overall financial picture, read on and be empowered to Face Your Finances in 2022.
Face Your Finances Decision:
Facing your finances starts with a decision to get a clear picture of exactly where you are financially. This may be a topic that you’ve been ignoring because of all the unknowns that you haven’t been addressing over the years. Once you make an internal decision to actually face your finances, it will take a plan of action to realize your decision.
So, how do you make a decision that you’ll actually follow through with? Find support, accountability and begin to immerse yourself in all things personal finance self-improvement. Think about what you use your “spare” time doing, watching, or reading. Some ideas include reading or listening to personal finance books or podcasts. If you’re heavily into social media, use those platforms to follow respected personal finance leaders.
Face Your Finances Action Steps
- Access your credit report
If you’re wondering where to begin, try starting with accessing a free copy of your credit report from www.annualcreditreport.com. You’re eligible to receive a free credit report weekly until April 20, 2022, from each of the three credit bureaus (Experian, Equifax, and TransUnion). After April 20, 2022, you’re eligible to receive one free report per credit bureau per year. Don’t let the unknowns of the report push you away from the computer. Login and check that credit report now!
- Make a List of Debts
I knew you could complete step 1, you now have momentum so let’s keep going! When you accessed your credit report, you may have discovered that some of those lingering debts were so old that they actually “dropped off” of your credit report. If not, don’t fret, you can still take control of your financial future. Go through your credit report and make a list of all outstanding debts and their balances. Check to ensure the debts are accurate and then we’ll talk about making a plan to pay off the debt.
- Know Where to Pay your Debts
Sometimes when there are old debts on your credit report, the owner of the debt may have changed. You’ll need to ensure your information for the payee is accurate which may actually take some time to figure out. There may be updated contact information from the debt collector that you’ll use to make a few phone calls and get the updated payee information. Ensure you are matching account numbers on the debts and keep good records of the debts that you’ve paid.
- Prepare a Budget
Before we talk about how we are going to pay off the debt listed from our credit report, we’ll have to get a clear understanding of exactly how much income we have available each month to pay our debts. Your budget should be in a usable format, although I prefer Excel, many people prefer an app-based budget or the old-fashioned pen and paper method. Whatever medium you use for your budget, ensure it’s something you’ll actually use. Your budget will be an at a glance tool tracking all of your income and expenses.
- Figure out how much you can actually pay towards your debt.
Now that you have a well thought out budget, you can begin plugging in the debts you owe from the credit report. This is the part of the action plan that needs to be realistic. If your debt payoff plan isn’t executable, then it’s really worthless. Determine how much you can actually pay towards your debt and decide how many of your debts you are able to begin paying off.
- Set a Monthly Financial Review Date
In order to keep up with this new financial focus, it’s important to keep this plan and these objectives in front of you on a recurring basis. Set a date on your calendar to go over your budget, the bills you’re paying and the updated balances of your outstanding bills. As you begin to see those balances decrease monthly, you should feel motivated to continue the process. Don’t forget, you can check your credit report for free on a weekly basis until April 20, 2022. You should begin to see your credit report update the debts you’ve been paying off.
Plan to Succeed
Like we mentioned earlier, it’s the beginning of the year and a great time to Face your Finances. Download and save those credit reports as you view them and plan to look at these documents at the end of the year. The December 2022 version of yourself is cheering you on and wishing you great success in your journey to Face your Finances in 2022.
The team at Better Financial Counseling is available to be a part of your team in this journey if you need an individualized financial plan or coaching. Contact Us