February Financial To-Do List

In our January financial calendar, we focused on making financial resolutions and setting yourself up for success throughout the year. Was making a plan to pay off your debt part of your goal-setting? If so, you’re not alone.

In 2019, U.S. consumer debt reached an unprecedented $13.86 trillion, and Generation Y, in particular, is feeling the sting. The average Millennial reports having $42,000 in debt, made up of student loans, credit card debt, and auto loans, among other expenses.

Unfortunately, debt can have significant, longstanding consequences on your financial health. Too much debt may:

• Require you to borrow from your future income
• Cost you more over time due to interest
• Prevent you from reaching your financial goals
• Negatively impact your credit score

However, there are ways to take control of your debt.

Our February financial calendar focuses on actionable tips that you can use to deal with debt and get your finances back on track. Use this February financial to-do list, examine your debt, and make a plan to improve your financial standing over the course of 2020.

February Financial Calendar

Print out the calendar view of your financial goals, and keep track of each of your February financial to-do’s with the checklist below.

1.  Create a List of All Current Debts

Your first task of February is the easiest: a simple inventory of all of your current debts. Run an inventory on all debt accounts to determine how much you owe in total, and list out each account, including total owed and interest rate. Some common examples of debts include:

• Student loans
• Credit card balances
• Auto loans
• Mortgage payments
• Personal loans

2.  Rank Your Debts: Choose Your Payment Method

Once you have a high-level view of all required payments, you can choose between two main payment methods: avalanche and snowball.

The Avalanche Method

This method requires that you pay debts in order of interest rate, starting with the highest. By paying down the accounts with the highest interest rate first, you’ll pay less overall in interest in the long run. However, high-interest accounts can take a while to pay back, as balances may be much larger. If you’re unable to see progress, it may affect your motivation to continue digging your way out of debt.

The Snowball Method

Those that need a little extra motivation can benefit from the psychological satisfaction of the snowball debt method. This requires that you pay your debts in order of balance amount, starting with the lowest. This allows you to get rid of smaller accounts quicker, which may help keep you motivated. However, this strategy may mean paying more interest in the long run.

Remember: Whichever method you choose, make minimum payments on all remaining debt balances each month.

3.  Determine Your Debt-To-Income (DTI) Ratio

Once you’ve got all of your debt payments in front of you, it’s time to determine your Debt-to-Income (DTI) ratio. This number is a key indicator of whether or not you’re living within your means. To calculate your DTI ratio, use the following equation:

(total monthly debt payments ÷ monthly gross income) ✕ 100 = DTI%

In general, financial experts recommend maintaining a Debt-to-Income ratio below 35%, so do what you can to keep your DTI ratio low.

Tip: You can also get immediate access to your DTI ratio and several other key financial health indicators with Turbo.

4.  Set Up Automatic Payments to Debt                     Accounts

Don’t make your debt worse by missing payments. Unfortunately, Americans make this mistake all too often. According to recent research, 1 in 4 U.S. adults are behind on their bills, and more than 71 million U.S. adults have debt in collections reported on their credit files. Luckily, it’s easy to prevent late or missed payments. Set up auto-pay on all of your debt accounts to ensure you meet minimum payments every month.

5.  Find Three Ways to Reduce Your Spending

If you want to pay off debt faster, it’s important to rein in your spending, especially when it comes to those non-essential expenditures. Take a look at your monthly payments and highlight any areas that you can reduce your spending. Here are some ideas to get you started:

• Skip the takeout: Eating out is a budget-buster. Instead of grabbing takeout, meal prep and save money. An added bonus? You can focus on reducing food waste: a financial and environmental win-win.
• Cancel unnecessary subscriptions: If you’ve now got yourself saddled with every streaming service available, consider cutting back. Whether it’s Netflix or DisneyPlus, consider which streaming channels you use the most and cut the fat.
• Make your own coffee: Skip the daily Starbucks run and make your own coffee.

Need more ideas? Check out our post on how to trick yourself into spending less. The money you save each month can then be funneled towards paying off your debt.

6.  Check In With Your Debt Progress

You can’t reach your goals without tracking your progress, and financial tasks are no different. Make a point to take inventory of your debts at the end of each month (don’t forget that February has 29 days this year – Happy Leap Year!). Tracking progress can actually help you stay committed; each bit of debt paid off will inspire you to continue on your journey towards debt-free living.

Final Notes

You don’t have to resolve yourself to living with debt forever. Use our financial calendar to track your money goals and get the most out of your money this year.

Prefer to do your financial planning online? Create an editable copy of our monthly template in three easy steps:

1. Open our Calendar Template in Google Sheets
2. Select “File”, then “Make a Copy”
3. Save in your own Google Drive to make edits

Check back in with us in March to grab your next monthly financial calendar and to-do list. We’ll be covering a wide array of financial topics and to-dos throughout the year, including tax prep, salary negotiation, investing, and more, to help you get on the road to true financial success.

Have any other tips for paying back debt? Let us know in the comments.