Once you have automated your debt payments, you can breath a sigh of relief. Many of your debt worries are behind you. The only thing left to do is to monitor your progress.
Step Six: Get in the habit of tracking your progress and monitoring your expenses. If you can, allocate additional money towards paying off debt.
Monitoring your statements
Of course you should be monitoring your monthly bank, loan, and credit card statements to ensure your payments are being made on time and are being allocated as you intended. In addition, you should also plan more detailed quarterly reviews of your progress. Sit down with all of your debt statements and look at how far you have come in just three short months! You should also evaluate your current expenses and income. Has anything changed? Did you get a raise at work? Are you spending less each month? Perhaps on heat, if it’s now summertime?
Putting extra funds to work
If you answer yes to any of those questions, you may have additional funds available to put towards your debt. Go to your credit card website or bank online bill-paying website and add to your monthly payments.
Watch your interest rate
Another important factor to keep track of is your interest rate. While you most likely have a fixed rate on any loans, many credit cards have variable rates, meaning they are going to fluctuate with the prime rate, set by the Federal Reserve Bank. If you notice your interest rate is much higher than it was, it may be time to again consider a balance transfer or debt consolidation move. As you pay off your debt you will become more credit-worthy again and may be able to qualify for better terms on a low APR credit card or other loan.
Watch your credit score
Lastly you should consider monitoring your credit score. Check your own credit score at least once a year, if not more frequently. (Here’s a list of ways to check and monitor your own credit score online). You should be looking for any unauthorized activity, which you should immediately report to the three major credit bureaus. But if you are making progress on repaying your debts, you should also notice a steady increase in your credit score.
Now that you are on your way to paying off your debt, it’s time for Step Seven: Learn to Live Debt Free. You can also go back and see all the steps in my Debt Free in Seven Steps system.