Do You Know How Much You Owe?

Do You Know How Much You Owe?

No one likes to talk about debt and how much debt they may be in.  We most times want to close our eyes and just hope they will take care of themselves, but we all know that is not true.  For most of us, we can swiftly state our monthly debt payments with ease one bill at a time, whether it’s the car note, phone bill, daycare, rent/mortgage, and utilities.  Those are all things that we you can probably say off the top of your head.  But when it comes to the total amount of debt you owed? Many people don’t know or don’t care to know. 

You might say, “Why does it even matter”?  It matters because the total debt amount is what is keeping you living from paycheck to paycheck and unable to do things you would like to do in life (without restraints).  If you haven’t added up your debt, you probably have not created a plan to get out of debt.  To change your habits, you need to see what the big number is. 

Tackling debt starts with writing it out or writing it down. Making a list of everything you owe, whether it’s mortgage, credit cards, car notes and even student loans.

Start by writing out the following:
1. The lender name
2. The amount you owe
3. The term of the loan/debt
4. The interest rate and fees

Then total them up. Sort them from the smallest amount to largest, or you can sort them by the length of time left to pay the debt. This will give you an idea of how much debt you have, how long you have to pay debt and possible ways to attack them. This is something that people do NOT like to do, but doing this is a necessary step to give you a complete look at all debt.

Once you’ve tallied the totals, you can create a plan for getting out of debt. Please don’t underestimate the power of a plan.  “Debt avalanche” or “debt snowball” are two of many methods that can be used to implement a plan to get out of debt.  Don’t get weary if it takes some time.  Just like a diet, you didn’t get in debt over night, so you most likely will not eliminate debt over night (unless you win the lottery).

If you’re having difficulties figuring out where to start or can’t do it on your own, you can seek help from a credit counseling agency, financial planner or money coach, or even a bankruptcy attorney. With a plan, and guidance if you need it, hopefully those fuzzy numbers will turn into a clear plan — and you’ll have a get-out-of-debt success story to share!

Cicely Jones is the owner of MPA Financials, a Full Service Accounting Firm with 15 years’ experience.  Cicely has a passion to spread knowledge of financial empowerment by educating clients and giving sound financial advice.




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