Step 1 - Making Peace with your Financial Reality

Prior to reading this, I hope you already took a few minutes to read my story.  I think it sets the tone for the blog posts to come.  If you'd like to read it now, you can find it here.

Tell me something.  When you receive notifications relating to bills (credit cards or otherwise), do you avoid them?  Whether it's snail-mail or email, do you cover your eyes, and peek through your fingers when you eventually (and likely at the last minute) look at the statement? 

This was me too.  Since I didn't have any other strategies left, my next best option was dodging the truth altogether.

As I'm sure you can already guess - this didn't help me - and it won't help you either.

To move ahead, the first step in getting yourself back on track includes finding out exactly where you stand - listing every debt you have including its interest payment and related interest rate.

It's uncomfortable but important in uncovering the truth about where you are.

Eventually, you'll make peace with it - and that can only happen when you face it.

Let's get started.


Take a piece of paper and a pen and write out the following:


Name of the Debt

  • card loan, student loan, line of credit, credit card, etc


Amount of the Debt

  • what do you owe for each debt


Interest Owing Per Month

  • rough estimate of how much interest you're paying each month


Interest Rate

  • this is usually a percentage (eg. 3%, 12%, 19.99%)


It should end up looking something like this...


Total all debts owing to get a total of everything you owe - don't leave out anything.  If you owe a friend $10, include it in your list.


Then, total all monthly interest owing.


Think of your current monthly income, what portion of your monthly income is servicing the total interest calculated?  Keep this in your mind - in a future post, this will be important.


Now that you have a sense of where you stand, you're ready for Step 2.


By the way, did anything surprise you?  Did you already have a good sense of this, or was digging into it revealing in any way?