So, you've decided that this is the year you'll finally get out of debt for good. But wait…do you really know how much debt you really owe? Most people have no idea how much money they owe to everyone.
But, the first step to getting out of debt is honestly taking a look at your total debt level.
Right now, grab a piece of paper and a pen and write down every single bit of money that you owe to figure out a grand total. If you have the bills, look for the grand total owed and write it down, or you can log into each of your debt accounts to look for the total amount owed. You can also check your credit report for free (each year) to make sure you caught everything.
Make sure you write each debt on a separate line and include information such as the monthly payment amount, interest rate, and total amount owed. That will help you when it comes time to start paying down your debt.
Debt accounts include:
- All Credit Cards (including store cards)
- Student Loans
- Vehicle Loans
- Home Equity Lines of Credit or Home Equity Loans
You can choose to add your mortgage into your total debt, but most people separate that out from their consumer debt and don't include it.
Once you have all your debt listed, use a calculator to total it all up to find out the grand total for how much you owe.
Don't panic! It's a great first step to find out how much you owe (and one that most people don't like to acknowledge). But, before you can serious about paying back and achieving freedom from debt, you need to know what you're up against.
We'll discuss how you're going to get started paying it back in a future post. But, if you break it down into smaller pieces, it won't seem so daunting. You can do it!
What about you? Do you know how much money you owe on all your debts? Or do you just make monthly minimum payments and try to live in denial of the total?