The First Step to Take When Paying Off Debt

August 4, 2016

The First Step to Take When Paying Off Debt

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A common question in regards to paying off debt is, “Where do I begin?” It can be overwhelming figuring out what to do first.

You’ve gained the inspiration you needed and figured out your “why”. You’ve made the tough and mature decision to begin paying off debt. Now, what do you do first?

The number one thing I recommend you do will set the stage for your debt-free journey and will give you a sense of peace in regards to your debt and your finances in general.

The first step you should take is…get organized.

This may not seem like an earth-shattering revelation, but it is so important, and getting organized rocked my world when I was paying off my $74,000 of debt.

There Is Power In Knowing

How much money do you owe in total? How much do you owe for each debt? What are the minimum payments, due dates, and interest rates of each of your debts? Who are your creditors? Who’s servicing your student loans? Do you have anything in collections?

If you don’t know the answers to these questions, then your sense of being overwhelmed by your debt is likely heightened. It felt overwhelming just asking them!

It can be scary to dig around and get the answers to these questions, but believe it or not, in answering them, you will gain a sense of empowerment because you will know what you’re up against. Whether you discover you’re in $15,000 of debt or $115,000, knowing the number will put an end to the fear that surrounded not knowing.

Steps To Getting Organized

Open your Mail and Answer your Phone

If you are dodging creditors and letting any call from a 1-800 number go to your voicemail, stop today! Ignoring the problem isn’t going to make it go away; it will only compound it.
Open your mail and talk to your creditors, so you can learn the details of what you owe and can begin to put together a well-informed action plan.

Create a Filing System

If your filing system is your email inbox, then you need a new one. I like the system outlined in David Bach’s Smart Women Finish Rich, or Smart Couples Finish Rich. You set aside time to create folders for all areas of your finances like, Tax Returns, Debt, Insurance, etc.

Because so much of our lives is handled electronically, you will need to tweak the filing system or create one based on how you manage your bills. The bottom line is, though, that you need to spend time gathering everything, so you have it in one place. There is an awesome, almost strange sense of peace of being able to find your tax return from four years ago or to be able to look up how much you’ve paid on your credit cards over the last three months.

Pay Your Bills On Time

While you are gathering all your information and figuring out your plan of attack, make it a priority to pay all of your bills on time – at least the minimum monthly payments. You do not want to increase your debt load, or amass past due amounts on your utilities or other obligations. If meeting at least the minimum payments on your bills is a struggle, then you will need to cut back on some expenses or find a way to bring in more income.

Get a Copy of Your Credit Report

To make sure you haven’t missed any valid debts, get a copy of your credit report from the three main credit reporting agencies, Experian, TransUnion, and Equifax. You can request each of them once a year for free at

Getting Organized Allows You to Move Forward

By taking the steps to get and remain organized, you will be laying the foundation to begin paying off your debt. Regardless of the method you use, you will set yourself up to move forward with clarity and a full understanding of your situation. And you would have accomplished the hardest part – starting!

Do you need to take the step of getting organized before paying off debt? Will you start today?


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