A myriad of people have faced the hardship of a debt at some point in their lives, including myself.
Believe it or not, I completed college with more than $90,000 in student loan debt! That’s big money.
I had absolutely no clue what to do and where to start my journey to pay off my debt.
Fortunately, my debt journey ended a few years ago, but there are many people around the world today who are still in the same exact situation. So I wanted to share some easy and effective ways to begin your journey of destroying your debt.
One thing to remember is that a debt isn’t something which would disappear overnight.Paying off debt can be a daunting process, but it’ll definitely be worth it in the end.
Shall we start with the first step?
Step 1 – Prepare A List Of Your Every Single Debt
It all starts with knowing every debt that you owe. I would like to state that this can be a bit of a hassle, but it is a compulsory first step. You need to start by pulling your free credit report. There are several places online where you get free credit reports as allowed by federal law.
Well, this report will reflect a complete list of all your debts owed by you (other than loans you borrowed from family and friends). In case your creditor hasn’t reported your recent payment, it might show the monthly balances owed a month off or so. But even then it will display the big picture of who you owe the money to.
Once you have this list of the money lenders/creditors, it’s time to dig the rest of the information out that you will need.
Step 2 – Grab Every Piece of Information On the Owed Debt
With the list of who you owe money to, now you need to figure out everything else about your debt. Let me explain through the following what I actually mean by this.
- The correct amount owed
- The payment amount
- The payment frequency (monthly, quarterly, etc.)
- The number of payments left (in case of a mortgage, student loan or car loan)
- The interest rate, and if it is fixed or variable
- If variable, then what the rate is based on (LIBOR, prime rate, etc.)
- The due dates
- The grace period (if valid)
Knowing all of this, raises another question that where to get this information from?
Well, to learn how much money you owe, you can check your latest statements. And for everything else, you’ll need to put in some efforts. For different types of loans, you need to check the signed loan documents. If you are unable to find the loan documents, you can contact the creditor or visit their website to check your account details.
When it comes to credit cards, check the terms documentation that you agreed to when you signed up for the card. This information can be available online after you access your account on your credit card company’s website.
If you encounter any trouble understanding the terms, dial the number given on the back of your credit card. Their representative will be more than happy to offer assistance to you.
Step 3 – Review Your Debt Situation
Now, it’s time to take a look at the big picture. You’ve figured out all the necessary details of the debt you owe. Most likely, it won’t be fun and it could be just dreadful, but there is no other choice than doing it to move in the right direction.
The first and the foremost thing is to add up the total debt amount you owe. There is strong chance that the final number may be scary, but we will work on putting its lights out, so don’t fret too much yet.
The next thing is to take all of your monthly payments and add them up. This is the minimum amount of money that is owed on your debt each month. Once more, this can be devastating, but you’ll be clearing your way as you pay down your debts one by one.
Congrats! You’ve Initiated The Process of Paying Off Your Debt
The steps you’ve accomplished so far have made you walk well along the process of paying off your debt. You now recognize everyone you need to pay money to, the amount of money you owe, and the total monthly payments. You now know all the basic information that you’ll need to land on a confirmed decision on how you’ll beat your debt into the ground.
Start making your way to financial freedom right now