inventorying debt i.e. regaining control

Lack of organization will cut your wings

You get a payday transfer, you'd like to pay off a friend you borrowed money from last month and you're about to call him, but you just got an SMS — it's a debt collection company. Come on! Delay again, and yet another mortgage, installments for the phone, and what about the bills?

Does this scenario seem realistic to you? In thousands of Polish homes, this is what everyday life looks like. Jumping from putting out one fire to another. Total chaos.

Even if you have the best of intentions, you will not achieve anything if you are not aware of the details. Not to mention control of the situation. Without comprehensive knowledge of your own debts, you leave things to chance. Therefore, today we will deal with a systematic inventory of your liabilities.

What debts do I have?

We'll start with the simplest part. Start Excel or another worksheet — you'll see in a moment that doing this on a sheet of paper doesn't make the slightest sense. List all your debts one under the other. Without any details, we'll get to that in a moment. Remind yourself of every, even the smallest, commitment you have.

What debts can you have:

• mortgage;
• installments for home furnishing;
• credit card;
• cash loan;
• car leasing;
• payday loan;
• loan from family or friends;
• overdue bills for housing and utilities;
• unpaid fines;
• alimony;
• a notebook with Mrs. Jadzi; etc.

These are just examples. There may be more to it, because addicted debtors are very creative in where they get their money from. Of course, a complete list should be formed already when calculating your net worth. If you haven't already, go back to the previous lesson.

Breakdown of debts into prime factors

As soon as you happen to miss the deadline for repayment of one obligation, the problem grows. With each subsequent it will get worse and worse, and all this is due to the lack of organization and repayment plan. You need to take control of your finances again, and that comes with specifics. And right now your sheet will start to fill up with them.

The more you know, the more you are able to control, so review your credit agreements, documents, prompts or other sources of information and find the following information in them:

• Type of debt; is the first part of this material - writing off your obligations. You did it just now.
• Creditor; to whom you owe - the name of the bank, loan company, etc. If you receive a prompt or other form of contact, you will quickly determine which debt is involved.
• The amount of debt; how much money you have left to repay. It allows you to easily sum up all obligations. It will also give you an image of which debts are worth attacking in the first place.
• Interest rate per annum; with it, you will compare debts and track those that drain your pocket through the highest interest.
• Remaining number of installments
• The minimum amount of the installment; this information allows you to determine the minimum monthly cost of all liabilities.
• Date of payment in the month; the basis for creating an appropriate queue of transfers.
• Do you have a delay in payment? Do not divide the schedule into 2 lists, but mark it in a separate table - this will make it easier for you to sort the sheet.
• How many days of delay? The greater the delay in payment, the greater the trouble.
• How much are you late with?
• Possibility of deferring repayment; Does the contract provide for credit holidays? If so, does it involve additional costs? Free suspension of debt repayment will help you free up funds with which you will overpay other obligations.
• Does a debt collection company/bailiff deal with the debt? As long as the debt does not have a significant delay, the creditor is rather fragile. The collection company will be gullible, and the bailiff will simply drive out of his shoe into the account - so it is best to get along with them. Do not avoid contact, do not reject calls. On the contrary! Show that you have a repayment plan and show initiative. You will stand out from the sputtering debtors, and maybe even manage to negotiate a new repayment schedule.
• Are there already penalty interests/fees on prompts?
• For whom was the debt incurred? For yourself or for someone? It happens that we go into debt for a loved one, due to their insufficient creditworthiness.
• For what purpose was the debt incurred? This information is irrelevant to its repayment, but since it hurts you now from just looking at it, then there is a chance that you will not repeat the mistake next time.
• Comment; anything you want to add from yourself. You can enter what feelings you have or how much you regret your decision.

The better you describe your debts, the easier it will be to draw up a plan for overcoming them, which we will deal with in the next material.

From just looking at the list, do you grind your teeth with dissatisfaction? Yes, this is quite a time-consuming task, but it is definitely worth doing. You can't do it only in your head, because not only is memory unreliable, but you will also be susceptible to the influence of emotions, which very often obscure the most favorable solutions for debtors.

What does it give you?

Without any analysis, only what the sheet will show you, that is, the basic set of information:

• Total amount of debts to be repaid.
• The total minimum amounts you have to pay per month.
• Total amounts of overdue debts.

However, Excel does not know what can be done with all the rest. And you can do a lot. But you've already done a lot anyway. Take a break, and in the next material we translate all of the above information into an effective action plan.