Credit Master or Debt Slave?

This year you decide –

Now that Christmas is past, for another year – Do you know how much money you owe in total on your credit cards, or will that be a surprise for you sometime in January?

Assessing the Damage

In order to be the Master of your own money, you must first find out how much money you have – or don’t have.

So, sit down with a pen and paper and list all of your debts no matter how painful it might be to see them on paper – include the mortgage and the car and don’t forget the overdraft on the bank account and the line of credit – now, add up the total.

Then say the numbers - out loud – Again! - Out loud!

Then on a separate piece of paper list all of your assets and their financial value. (This is what you think those assets are worth today, if you tried to sell them) - Be realistic, your household furniture is not worth what you paid for it – it may be worth 10 to 20 percent of its original purchase price or even less. So be honest with yourself - add up the total your assets.

Now, subtract the total debts from the total assets. The difference is your net worth. This is what you are worth financially if you liquidated yourself today!

How does that feel? Are you pleasantly surprised or painfully reminded that you are not in charge!

Do you want to be Debt Free?

I have heard it said, “Money is the root of all evil”. Perhaps, that is true if you let the money be in charge.

You must learn to how to be in charge of your money or you will never get out of debt.

However, this can and does take some effort, it means you must know where you are spending your money - All of your money!

Have you ever lived on a budget?

The word Budget does not mean deprivation - it means to plan! So, let’s get started – download your free budget worksheet here.

Start off by filling out the worksheet with your net income – how much money comes into your household? The key word here, is net income – (take home pay)

Then fill in all the categories on the worksheet that your family spends money on – if you need more categories write them in –

Don’t forget to add in the car payment, the debt payments and of course the overdraft payment every month at the bank.

How does it look?

Take note: there is just one thing this worksheet must do, and that, is balance! – So when you total your worksheet it cannot, add up to more than your net income is –

If it does, you are using credit to live on and you have become a slave to your creditors.

If you are in debt and want to budget your way out of debt here are some helpful points.

Tipping the Financial Scales

First stop using credit – destroy your credit cards – that’s right, cut them up and throw them out – some of my clients have great difficulty with this task but I recommend it – In order to get out of debt you must stop creating it.
Close your accounts to further shopping – call the creditors and have them close the accounts – you can always reopen them once they are paid off if you choose to.
Identify and set your financial goals –where do you want to be financially in 1, 3, and 5 years - be very specific
Create a balanced budget from your solutions worksheet – (expenses and income must be same) this may mean cutting back – way back!
Understand “needs” and “wants” in your budget - take care of your needs first
Irregular expenses – i.e. car repairs, gifts, clothes, and pets – must be factored into your monthly totals even if you do not spend money on these items each month. The car will break down – the dog will get sick – if not today then tomorrow – you need to put money aside for these items.
Have a savings and a chequing account at your financial institution
Track your spending – using a daily spending diary – This is the key to budgeting
Save – put some money into a saving account every pay period – the amount you save is up to you
Sit down and evaluate your spending weekly – compare your spending to your monthly worksheet plan. Are you on track? If not, why not?
If your debt load is overwhelming, or you need help with your budget speak to a qualified credit counsellor there is help available – know all of your credit solutions and your rights before making any financial decisions.

It will take you 12 months of tracking and analyzing your spending patterns before you will have created a budget that works for you – but just think, next Christmas you will be a Credit Master not a Debt Slave.

As we close 2002, I want to personally wish each and everyone the very best of the coming year.

Remember, if you are experiencing financial difficulties do not wait. Speak to a professional today.

Do you have a story that you would like to share about your experience with a debt collector? Email me - This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

Margaret H. Johnson ACE. RQIC is president of Solutions Credit Counselling Service Inc. and Women and Money Inc. She can be reached by e-mail at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
Or call toll-free in Canada - 1 877 913 2008
Phone: (604) 588-9491 Fax: (604) 588-9007