9 Steps to Get Out of Debt - Analyze Your Debt
The next step is to figure out exactly how much you owe. First, make a list of every debt you have. Not just credit cards, everything. Credit cards, department store credit, mortgages, car payments, unpaid past-due bills, student loans -- everything.You do not need to count items such as recurring bills like
electric, gas, cable, etc. These are not debt, they are recurring
expenses. At any time you could shut these off and not owe any
additional money, although it may make life unpleasant, to say the
least.
Once you have a list of what you owe, you need to determine what
your remaining balance is on each item, the current interest rate and
your monthly payment for each debt. On most loans you’ll be able to
find this information on your monthly bills. However, you may have to
make some phone calls to get this information for other debt. Add the
remaining amount on each of these items together, this is your total
amount of debt. Also, add together your monthly payments for each of
these debts to determine the total monthly cost of your debt.
Now, you need to determine how much this debt is going to cost you
if you continue making the payments you currently are. You can do this
by completing an amortization table for each debt. Don’t worry, we’re
not going to make you do this yourself, you can use our amortization
calculator located at http://www.destroydebt.com/calculators/ . This will tell you two key pieces of data: how
much each debt is going to cost you, and when it will be paid off. Add
the total cost of each loan together; this is the total cost of your
debt. This number can be scary at first, but don’t get too worried yet,
this should be the last time you see this number.
If your total monthly debt is greater than 50% of your net monthly
income, or you have found yourself in a situation where you are unable
to pay your bills and have fallen behind by several months, I would
suggest you stop here and seek the advice of a professional financial
counselor. Otherwise, continue on.
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