Determining Your Current
Debt Situation

The first thing that should be done when faced with any situation is to sit down and figure out exactly where you are starting from.  In relation to reducing your debt this means determining exactly how much your current debt is.

This would seem like the logical thing to do, but if you where to ask the majority of people they would say that they know exactly how much their debt is.  However, when they actually sit down with a pen, paper, and a calculator they are amazed at how much debt they actually have.

It is difficult for the average person to remember how much they owe on all of their various debts.  It is when you have the opportunity to sit down and list the individual debts, the amount owed, and add them together that how much you owe becomes clear.

Be sure to prepare yourself for a big surprise, because most people are shocked to find out what their actual debt is.  The good thing is that you will finally have a very clear picture of why you think your income should be enough, but it is actually not enough to cover your expenses.

The first step in your debt management program is to completely address your current situation.

Only after doing addressing your situation will you be able to create a plan and budget that will help you to eliminate debt from your life.

When creating your budget you will need to be sure to list all of your debts no matter how small or insignificant you think that they may be.  The reason you want to do this is so that you don't forget to pay any debts.  It will also give you an opportunity to identify some small debts which can be eliminated quickly.  Eliminating small debts will give you a sense of accomplishment, and can actually fuel your resolve to continue reducing your debt.  Also, even small debts left unpaid can have a deterimental effect on your credit rating.