Step 1 Toward A Debt-Free Life: Take Stock Of Your Debt
It happens every year: You spend a lot during the holiday season, and then the bills start arriving in January. Or you're still paying off that car note, student loans and consumer debt that you've racked up over the years. You have determined that this will be the year you finally pay down — or pay off — that debt. Congratulations on making that commitment!
Over the next several months, we'll be pointing you toward resources and a series of steps you can take to move toward a debt-free life. Debt can be stressful. Numerous studies have shown that debt is a leading cause of stress. If you've ever woken up at 3 a.m. worrying about money, you know what that feels like. Money won't buy happiness, but having enough to cover your expenses and to live comfortably can give you some peace of mind.
The first step toward getting out of debt is to have a solid understanding of what debt you have. (You've probably heard the phrase, "Knowing is half the battle!") Pulling together this information may take a little bit of research. Look at all of your monthly statements from any loans you have outstanding and find out what interest rate you're paying on them, including car payments, student loans, home equity loans and personal loans. Then, look up all the total balances of your credit cards.
Put together a list of total amounts, the interest rate and minimum (or your normal) monthly payment. A spreadsheet will be your best tool to keep track of this. Then, organize your debt into different categories, such as credit card debt, student debt, personal loans, etc. It may be a little bit scary to see all the numbers in one place, but once you start creating and implementing a plan to pay off those debts, seeing the change over time in that one place will be very motivating!
Stay tuned over the next several weeks as we bring you through a series of steps toward a debt-free life. If you want to get a jump start, consider signing up for a meeting with one of our CommonWealth One certified financial counselors. This service is free and can help you make 2020 the year you take control of your money.
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