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When it comes to budgeting it doesn't matter where you start.

What matters is that you do start!  - Moni Ora

Get Control of Debt

Debt can be stressful.  It can keep us awake at night and the worry of it can impact our wellbeing and our relationships. Keeping up with payments while juggling everyday life expenses can be hard enough but when something unexpected happens things can start spiraling out of control. 

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Here is a sheet in a simple list format designed to gather all the important things to know about our debts. To take control, we must know exactly how much we owe and to whom we owe it. Gathering all the details and getting it all out on the table is the first step. 

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Debt solutions can include:

  • Negotiating affordable debt repayment plans

  • Ngā Tāngata microfinance

  • Hardship applications or KiwiSaver withdrawal 

  • Insolvency options; Debt Repayment Order (DRO), No Assets Procedure (NAP), Bankruptcy

  • Creditors Proposal 

 

But first, gather all your info together... Make a start, download the spreadsheet, and gather your debt information into one place. If you want help, a Moni Ora Financial Mentor can support you to develop a debt plan that's right for you.

Start with what's worrying you the most.

Make a list of what you do know and estimate what you're not sure of.

Then add, adjust & amend as you find things out. 

The Debt Schedule is a worksheet you can use to keep all your debt information together. It is a simple list format designed to gather all the important things you need to know about your debts. 

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Columns include: 

  1. Creditor name is the person or company you owe money to. Include all your debts even if they are old and have already been sent to collections and you haven't got a current payment plan - put 'em all on the list. 

  2. Total debt is the total amount you still have to pay off. If you don't know exactly just put the amount you think it might be and include a note in the comments column to remind you to find out. 

  3. Secured or Unsecured column is asking if the debt is secured or unsecured. With a secured loan if you default on your payments or get behind, the creditor can seize property and sell it to recoup the funds owed.  That means if you stop paying - something will be repossessed. With unsecured debt, the creditor may take court action to collect what is owed if the loan/account goes into default. 

  4. Overdue is asking are you behind with payments, or are payments are overdue? If so, put how much is overdue in this column. 

  5. Payment amount is the amount you agreed to pay each week, fortnight, or month. 

  6. Frequency is how often you make payments ie weekly, fortnightly or monthly, etc... 

  7. Interest rate is the rate of interest you are paying, on the loan/contract. Note the frequency that the interest is calculated if you know it. 

  8. Priority is asking you to rate or prioritise the debt in order of importance. There is no right or wrong, this column simply indicates to yourself in which order you'd prefer to tackle the list. As a general guide, any payments that are overdue and at risk of penalty fees and interest or repossession would be a higher priority because they are costing you money. 

  9. Comments/Notes is simply that - somewhere to add extra key points that are important or reminders for you to follow up.

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"In this example, Mary-Jane is worried about her power being cut off but she has no worries  with her no-interest loan"

"Mary-Jane will pay $600 more for her Good Deals Loan in interest over the term of the loan"

As you might realise, making a list of your debt and dealing with it are two different things - the list is a step in the budgeting process - it's a start. For some people seeing their debt all laid bare is enough to show them what needs to be done but for others, it's not so clear. 

The debt schedule is half of the picture - the budget worksheet is the other half. The full picture shows your current financial position - you need to know your financial position so you can know which direction to take. So, if you haven't already, draft your budget to take another step toward gaining financial control. 

If you have unaffordable debt you will need to make some adjustments. This may include talking with your creditors, negotiating, and maybe applying for hardship provisions. See our blog 'Lost income? Take Action' for some stop-gap measures to reduce the pressure while you work to improve your situation. Debt is certainly much harder to get out of than it was to get into - but if you have a realistic plan you can achieve a life without crippling debt. 

Remember, Moni Ora is here to support your journey. Phone to book a confidential session if you want some help, 06 867 7173.

Nau mai ki te kōrero
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