Debt-Free Forever by Gail Vaz-Oxlade (the beginning after the end read novel .TXT) 📕

you’re going to have to suck it up, take your time, and work through the process slowly and steadily if you want to change your financial landscape. Holding your head and saying, “Oh, I just can’t” won’t cut it if you’re serious about becoming debt-free forever. It may be hard, but it’ll be worth it.

First, organize your statements. Put all your Bank of Zulu credit card statements in one pile, all your Bank of Make More Money statements in another. Get everything ready before you start so you aren’t chasing paper around once you’re into the process. A little preparation at the beginning helps the whole (miserable!) process go a little more smoothly.

Make a spreadsheet using the categories in the expenses column of the worksheet on page1221–23. You are going to be using this worksheet to record your spending so that you can see just what you’ve been doing with your money. We’ll call this your Spending Analysis Worksheet, and it must accurately reflect what you’re spending your money on. The idea is to make it as detailed as possible to begin with, so that you have a really good sense of where your money has been going. Resist the urge to lump together amounts or to round up. Lumping and rounding just makes it easy for you to hide what may be your problem-spending areas. Breaking everything down not only makes it clear where the money is going, but also helps you to see your weaknesses.

STEP 2: PLUG IN YOUR NUMBERS

Brace yourself. It’s time to enter every single transaction you made on your bank statement(s), credit card statement(s), and line of credit statement(s) onto the Spending Analysis Worksheet.

If you have one, choose a credit card statement to start with. Look at the transactions on the statement. The first one may say Big Chicken Delight, which is your favourite place to grab dinner when you’ve been schlepping the kids around all afternoon. Enter the amount you spent at Big Chicken Delight under Restaurants. Put a check mark beside the Big Chicken Delight transaction so you know you’ve entered it on your Spending Analysis Worksheet. If the phone rings or you have to get up to turn off the kettle, you’ll know where you are when you return to the process.

Go to the next transaction on the statement. Enter the amount you spent in the appropriate place on the Spending Analysis Worksheet. Keep going until you’ve finished entering all the transactions on that statement. Don’t forget to enter the amount you were charged for interest under Interest Costs. If there were insurance costs, over-limit fees, or any other type of charges, stick ‘em all under Interest Costs.

GAIL’S TIPS

While the interest rate on a credit card may be set at 19.99%, you may be paying much more than that if your card has additional fees tacked on each month. Let’s look at a credit card with an insurance fee of $28.44 on a balance of $1,623, along with an over-limit fee of $35. When you add it all up:

•monthly interest = $27.03

•plus insurance fee = $28.44

•plus over-limit fee = $35

•divided by balance = $1,623

•multiplied by 100 (to get a percentage)

•and then multiplied by 12 to get the annual percentage

the effective interest rate on this card is a whopping 67%. The fees are just as important as the interest rate when it comes to determining what your credit card is really costing you.

Once you’ve finished with one statement, start with the next month for that form of credit. After you’ve entered all the amounts from all the statements you have for that card, move on to the next set of statements.

I know, I know, it’s a lot of work. But hey, you’ve been sweeping dirt under the carpet for months, years, maybe even decades. Now it’s time to move the furniture, take up the carpet, and give the whole place a good cleaning.

If you ate out 12 times on one credit card, 6 times on another, and 10 times using your debit or cash card, you’ll have a total of 28 numbers to add up that would go under Restaurants. Coffee shops and drive-thrus count too. You have to account for every penny you spent.

This is going to take some time. Don’t rush through it. It’s a big eye-opener, and you need to go through every statement, line by line, allocating the amounts to their appropriate categories. Don’t lump too many things into a single category. The devil is in the details.

GAIL’S TIPS

If your batch of statements includes a big-spending month like December because of the holidays or a vacation, your numbers will be somewhat skewed by that spending. But this isn’t a budget. This is a spending analysis, so if you spent it, the amount needs to go into the analysis. You’ll be able to correct for these big-spending months and for things like house insurance, car insurance, and other periodic expenses that may not be reflected in the six months’ of paperwork you are using when it comes time to make a budget.

For every statement you have, fill in the various categories on the Spending Analysis Worksheet. Use your common sense to decide where to put things and what you can group together. Anything that you did to maintain or improve your home goes under Home Maintenance. Lottery tickets and football bets go under Gambling, I don’t care how benign you think they are.

If you have a bunch of transactions in department or discount department stores that you can’t break into categories, simply enter them into the Department Store category. It’s stuff, and the fact that you don’t know how much you spent or on what is telling you something.

All that money you took out as Cash Withdrawals or Cash Advances on your credit card or line of credit has to go under Cash. While you may not be able to figure out where that money went, it went, and it has