Someone doing this may say that they have $5,000 in credit card debt, $10,000 on a car loan and $20,000 in student loans. Mentally, it sounds a lot better than saying that they have $35,000 in debt. It is just one of the many excuses people use to justify staying in debt. It is time to address this issue.
Why I Should Find Out How Much Debt I Have
It is important that you do not separate the total amount of debt that you owe from each other because it can make it much easier to continue to go into debt. A true financial picture will list a large lump sum of all of the debt, and then a comparison of that to the amount that you currently make a year. If you owe more than you make in a year, you need to begin working quickly to stop going into debt and to turn that number around. It also helps to add up and see the big number in order to change your habits. As a culture, many people see a payment that they have to make instead of an opportunity that they are losing. Although you may look at some debts as being better than others, you need to include them all in your debt payment plan. Looking at the big number can help change the way that you think and feel about money.
Finding Out How Much Debt I Have
There are two things you should do with these figures. First, look at your budget and determine what percentage of your take-home pay is being used to pay the minimum payments on your debt. This percentage should never rise above 30% of your income because it is dangerous. Then, subtract the amount you pay in interest each month from that amount you pay towards debt each month. The resulting number is the amount that you are actually reducing your debt each month. These calculations and questions can help you see where you are currently standing financially. Your debt may quickly take over your life and limit your options because you always have a payment. Additionally, consider what you could do with all of the money that you send off to pay on your debt each month. Each of these factors can help you make the decision to get out of debt and stay out of debt. It is important to stay focused on getting out of debt while you are working on your debt payment plan.
