A friend recently asked me what she could do to take control of her finances. She didn’t bring up numbers, and I wasn’t comfortable asking, but I know that she has a good amount of student loan debt as well as credit card debt. It was clear she wasn’t entirely sure how much debt she had, nor had she thought about a long term repayment plan.
After thinking a moment, I responded that the first step for her should be to sit down and get the facts. In my opinion, to get a handle on her finances, she needs to figure out what she owes, who she owes it to, and what and when she has to pay.
Simple enough, right? Surprisingly, a number of people in debt have no idea how much debt they truly have. That seems to be especially true with credit card debt. Too many consumers believe that if they pay the minimum amount due on their credit card, that they will be making a dent in the debt. Unfortunately, due to high interest rates, these consumers often aren’t even paying the interest they were charged that month. That means their debt is increasing, rather than decreasing.
I realize that for many people reading, this might seem like common sense, but for some of you, this might be surprising news. Either way, if you were like my friend and asked me what you should do to get a handle on your debt, I would tell you the same thing – take a realistic look at what you owe.
More steps in the upcoming days. Stay tuned!