If your financial goal this year is to get out of debt, you’ll first need to figure out what your debt is. We knew we were ready to face the music when we felt the weight of our debt. We knew it was probably going to be a lot, but soon found out that it was a lot plus another $10,000.
If you’re ready to rid the burden and weight that is debt, follow these simple steps to help you identify your debt and then we can start looking at ways to attack it.
How to Determine How Much you Owe
Make a List of Everyone You Owe: Gather up your statements and print off a copy of your credit report. Listed on your credit report will be all companies that you have credit with and how much you owe as of the last time it was reported (this may not be updated every month, so it’s always good to check the latest balance on the statements or online).
It is a good idea to check it on an annual basis anyway to make sure that the information is up to date and there aren’t any errors or possible fraud. You can obtain a free credit report here .
Find out Everything You Can About Your Debts: You’ll want to find out the following about each of your debts:
- The total amount owed
- The minimum payment for each of your debts
- The interest rate
- When each payment due (monthly, quarterly, annually)
- If it is an installment loan, the date when that debt is scheduled to be paid off.
Assess Your Situation: Although this may seem scary, remember that this is just the starting point and it’s only going to get better from here.
- First, add up the total amount of debt you owe. This may number may seem scary and overwhelming, but remember it won’t be that number for long because we were going to be knocking it down.
- Next, take the amount of all of your minimum payments and add them up. This the minimum amount of money that you owe on your debt every month. Again, this can be overwhelming depending on the amount of debt that you have, but those payments will seem more manageable once you start eliminating those bills.
The other thing I realized about myself when I added up all of the debt was the amount of money spent to keep up with the Jones’. None of our debt was the result of a medical or financial crisis. It was all just stuff, items purchased to impress. After reading this blog post though, I was happy to know I wasn’t alone.
Now that we have faced the music, let’s look at some different plans of attack and figure out which one will work for you.
- What would having no more debt payments mean to you?