Welcome to step 1 of debt month – figuring out how much money you owe. It’s important to do this, even if you think it’s going to scare the heck out of you! The longer you ignore it, the higher your debt will be – and the scarier the final total will be!
So it’s time to buckle down and figure out just how much money you owe. There are two main steps to this:
1. Figuring out all your debts.
2. Recording details about them such as amount, payment date, etc.
1. Figuring out all your debts
Yup, all of them! Try to think of it as a treasure hunt for adults, with the eventual prize being peace of mind. In order to do this, you need to track down information about all your debts.
- Gather any paper copies you have of unpaid bills, student loans, mortgage payments, due, etc. Basically, any record that shows who you owe money to and how much.
- If you don’t have hard copies, go online and print out the information you’ll need (payment amount, the overall amount due, payment due date, etc.). It may seem wasteful to print out the information you can access online, but having a copy of ALL your debt information in one place will help make sure you don’t miss anything.
- If you don’t have either a paper copy or an online copy you can print out, or that information is out of date, you may need to make some phone calls. It may take time to track down details on student loans, but persevere – and make sure to take notes so you have all the primary details about your debt recorded.
Now you’re ready for step 2.
2. Recording details about your debt
The good news is – you’ve done the hard part. You’ve gathered all the information you need to figure out how much you owe. Now you have to record details about you owe. I suggest you do it in a spreadsheet or Word document if possible as it’ll be easier to update, but if paper and pen work better for you, then go that route. You need to record the following information about your debt:
- Who you owe it to (e.g. Bank, Credit Card company, etc.)
- How much you owe overall – e.g. your entire mortgage amount, your entire student loan amount, etc.
- What interest rate you’re paying on it.
- What your monthly payment is for your debt.
- How much your monthly payment is.
After that – put together a total of how much you owe overall (e.g. 200,000 on a mortgage, 40, 000 on credit cards etc.) and how much you owe each month in total monthly payments.
Now what?
You’ve collected information about all your debts and recorded them in one place. You know how much you owe overall, and how much you owe in monthly payments. Now comes the next hard part – figuring out how you’re going to start paying your debt off. I’ll cover that topic next week, so stay tuned!
