You won’t be able to get out of debt without doing this first. With this one simple step, you’ll be able to pay off your debt quickly and confidently.
So I hear you want to get out of debt? That’s awesome.
You feel trapped and stressed by your debt. You want to break free. That’s fantastic.
But how do you start paying off your debt? What is the very first step you need to take on your debt-freedom journey? Let me share!
The first step in paying off debt
The first step in paying off your debt is to find out everything you can about your debt.
And I mean everything. Learn it all.
The most important information you need to know about EACH of your debts is:
- Loan company/holder (i.e. Sallie Mae)
- Account number
- Minimum payment (i.e. $325/month)
- Interest rate (i.e. 7.2%)
- Loan terms (length of repayment, special terms like changes in interest rate after a certain time period, etc.)
Additional information that you probably want to know about EACH of your debts is:
- Starting balance (for me, this is a must; I love to see how far I have come by comparing my current balance to my starting balance)
- Link to the website where you check your balance and pay your bill
- Username and password to sign into website
- Phone number for loan company/holder in case you have any questions or problems with your account and/or repayment
Collect all of this information and put it in one place. Maybe it’s a sheet of paper, maybe a Word or Excel document. Just keep it in an easily accessible, easily readable format.
How do I find out information about my debt?
First, gather all the information you have, especially bills, website URLs, usernames, and passwords.
Then, dig through those bills and websites. Find out as much information as you can; try to find all the information in the lists above (for each debt).
Call each loan company to find out any missing information.
Check your credit reports to make sure you aren’t forgetting a debt.
If you have borrowed money from friends and family in the past, have a conversation with them to make sure you don’t owe them any money. Yes, even family and friend loans count as debt!
Even if you think you have all the information about your debt, I encourage you to dig around a little – there can be some surprising details in the fine print.
Is knowing information about your debt really that important?
Yes! Yes it really is! I’ve got two stories for you that hopefully prove my point:
1. When I graduated college, I knew that I had taken out federal loans and private student loans each year. I started to pay these once the bills came in. However, I had a surprise $4,000 student loan that I did not realize I had taken out. I must have signed for it (without realizing it) when I got my college acceptance letter. I wish I had looked at my credit report because then I wouldn’t have been surprised by this debt.
2. My second surprise was that my private student loan interest rate went up 2% after four years of payments. I was so surprised by this fact. I thought my fixed interest rate was fixed for the life of the loan, not just the first four years.
Have I convinced you yet? Take time to learn everything you can about your debt situation. Knowledge is power.
You need to know your starting point
You can’t plan a road trip without knowing your starting city.
You can’t teach a child Algebra without knowing their starting/existing math skills.
You can’t become debt-free without knowing your starting debt.
You can’t skip this: The first step to getting out of debt is finding out everything you can about your existing debt.
Taking action TODAY on that first step to paying off debt
Sometimes you need a little bit of help, just a slight push, to force you to take that first step towards paying off your debt.
Well, I’m here for that gentle nudge of encouragement. And I’ve developed a template to help you complete this first step. Sign up in the box below, and you will receive a template that helps you gather information you need about your debt. Easy peasy.
Do you have all the information about your debt recorded in one place?