Your Debt: Analyze What You Owe

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Analyzing Your Debt


If you're searching for debt relief tips, chances are you're aware that you're not in an ideal situation. Now that you've acknowledged that, it's time to approach your debt directly. You cannot approach debt from the side like an old friend; you must approach it head on like the enemy it is.



Figuring out how much money you owe


The first step to attacking your debt is to see how much money you owe. Gather all of the statements you can find into one place and start writing down the amounts. Microsoft Excel is a great tool for this exercise, as you will be able to tally up the amounts as you add them to the list. Even if you're certain that you have found all of your applicable statements, another thing you should do is check your credit to ensure that you've found everything and that there are no erroneous debts ascribed to you. You are entitled by Federal Law to obtain one free credit report per year from each of the big three credit agencies: Equifax, Experian, and Transunion.


Analyzing your debt


Once you have all of your debts listed, the next step is to analyze what you owe. Some debts, like medical bills, do not generally do not accrue interest, whereas many other debts do. You should indicate whether or not each account bears interest, and for interest-bearing accounts, list the applicable interest rates. Also take care to note the status (open, closed, charged off, etc.) of each account as well as the minimum monthly payments for each. All of this information will help you prioritize your debts and form your plan.


Forming a Plan


With the clear view of your financial picture in hand, you can now build a plan to get out of debt. If you can see that you have enough money to make the monthly payments necessary, there are many successful get-out-of-debt plans, one of which is called the debt snowball. In the debt snowball, you pay off your debts in either size order (smallest to largest) or interest order (largest interest rate to smallest). You might, however, see plainly that you will no be able to make ALL of the minimum payments every month. If that is the case, a part of your plan may be to seek debt consolidation advice from a reputable company.

Either way, if you figure out how much you owe, analyze your debts, and form a plan, you will be well on your way to paying off your debt. It will take persistence and possibly some sacrifices (don't worry; being paying down your debt feels better than eating at a restaurant), but if you stick to your plan, you will achieve your goal of being debt free.