The First Step to Tackling Your Debt


Before we can make a plan to pay down our debt, we want to take inventory. All that means is knowing what we have and where it is. 

While facing our debt can feel really daunting, in most cases, it’s a lot more stressful not knowing than knowing. Once we are fully aware of our situation, we can do something about it. We know what we’re dealing with and can make a plan to handle it. There’s power in that. 

How do we take inventory? We’ll want to gather some key pieces of information. We have a handy inventory tool to make this as painless as possible, or you can make your own inventory sheet in Excel, Google Docs, or even on a piece of paper. The most important thing is that we do it. 

First, name the debt.

In whatever document you created, list out everything you owe in one column. This includes any and all credit cards, student loans, personal loans, mortgages, car loans, and even money you owe to family and friends. Name it something that makes it clear which item you’re talking about. 

Next comes the balance.

Then the next column is for how much you owe to each of these places. This is also called your balance (the amount you currently owe). Add another column that will look the exact same right now but call it “current balance.”  As you pay down your debt, you can update this column. 

Gather your interest rates.

Find out the interest rates on each piece of debt. This might also be called annual percentage rate (APR), and some credit cards make it really hard to find. You can get an estimate yourself by dividing your interest charges that month by the beginning balance on your credit card that month and multiplying it by twelve. 

Find your minimum payments or payment amounts.

Then we want to know how much we are required to pay each month toward each piece of debt. For credit cards, this comes in the form of minimum payments, which means the minimum amount you’re allowed to pay the credit card company. For other loans, it’s the regular loan payment. 

What are your payment dates?

We also want to know when these payments are due. This is helpful for planning, but it also serves as a quick look to see if certain paychecks are getting hit harder. For many, it’s helpful to space out rent and debt payments a bit since they are often big expenses.

Once you have this information down for everything you owe, you’ve done it! You’ve taken inventory. This is a huge step toward tackling your debt. It’s time to celebrate! 

Going forward, we can track the balances as they decrease. It’s really fun and motivating to track our progress.