If you Google the words "debt reduction", you're going to get back about 11 million results.
That tells me that: 1) There are lots of people writing about debt reduction and
2) There are lots of people struggling with their debt.
Part of becoming a financially healthy family is to consider a debt reduction program, or just getting your debt paid down.
You don't need fancy spreadsheets, or pay a company to make a debt reduction plan. All you really need is some paper, a pencil and eraser, a calculator and some motivation to put your plan together.
First of all, you need to know where you are. Be honest with yourself. Get all your statements together, and write down all that you owe to companies or people. It all counts. Steel yourself, because the number may be much larger than you expected. Be sure to write down the minimum payments that are due, and the rate of interest you are paying for each debt.
On another sheet, write down all the money that is coming in, from all sources. Include your pay cheques, your child tax credit, Gst/Hst rebates from the government, everything. Adding this all up will let you know what you have to work with.
On a third sheet, you need to write down what you pay out for rent or mortgage, utilities, cable, cellphone bill, gas and oil changes for your car, insurances, and everything else you can think of. Don't forget to include occasional expenses like programs and expenditures for your kids school or extracurricular activities. This is also where you write down gift expenses for birthdays and the amount you typically spend for Christmas. Include savings amounts for retirement, post-secondary education and your emergency fund as well.
Start out with an annual number. If your annual after tax income is not enough to meet your obligations, you're in trouble financially speaking.
When we did this exercise, we were shocked at the amount of money we owed. Especially to credit card companies. The worst part was, we couldn't even remember what we 'spent' all that money on!
If you haven't already done this exercise, I urge you to do it this week. Make a commitment to yourself that you will set aside an amount of time every day to get your financial house back in order.
You'll be glad you did.