Master money in five steps

Is your bank account in disarray? The more you plan, the less daunting the phrase “financial management” will seem. It’s easier than it might appear: If you can organize your DVR queue, you can organize your money – we promise.

These five steps can help you organize your finances:

1. Make a list of your accounts.
Take stock by putting together a list of every account you own. That means checking accounts, savings accounts, CDs, money market accounts, that store charge card from 10 years ago you never got around to closing – everything should be recorded in one central location.

2. Make a list of your current debt.
Write out your current debts and the interest rates associated with each. Consider all the debt you’ve got going on: student loans, car loans, credit cards, mortgages, and any others. Tip: Finding out your credit score will help you understand why your interest rates are what they are.

3. Pick one debt to pay off first.
Look at not only the biggest debt, but also the affiliated interest rates. Which number looks the scariest? That’s the one to prioritize. Figure out what you can realistically afford to pay toward one priority debt each month, and commit to paying the monthly minimum on all others until the “big guy” is paid in full. How long will that take? Use this debt calculator to find out. Tip: If you’re looking to make some headway with your credit card debt, think about transferring your balances to a credit card with a low intro rate – but be sure to check the transfer fee.

Figure out what you can realistically afford to pay toward one priority debt each month, and commit to paying the monthly minimum on all others until the “big guy” is paid in full.

4. Set a savings goal.
Write down one thing you want to save for, and set a savings goal. Make a simple, tangible goal (which should be starting an emergency fund if you don’t already have one). This savings calculator can help you make sense of your target and your savings progress so you can decide how to bridge the gap between the two.

5. Calculate your net worth.
Subtract your debt from your account balances: That’s your net worth. Looking at everything you have against everything you owe will give you a better sense of the shape you’re in.

FOR MORE INSIGHT

On accounts management
Credit reports and scores (USA.gov)
Debt payoff calculator (FinancialCalculator.org)
Savings calculator (Financial-Calculators.com)

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