To help you reach your goals and take control of your debts, we’ve broken the process down into 4 manageable steps. With each article, we’ll guide you through the action plan with a clear to-do list so you know exactly what you need to do.
Step 1: Work out how much you owe
Paying down your debts can help you build your credit score, deal with anything unexpected life throws at you, and it will likely save you hundreds (if not thousands) of pounds in interest.
And the biggest benefit of all is that taking the steps to pay off your debts is going to help you achieve your goals. Whether you want to buy a house, have or care for a family, or simply be in a place where you’re not worrying about money; paying off your debts is one of the best ways to get you there.
We’ve broken the process down to take you through step-by-step. All you have to do is tick each item off of your To-do list and you’ll be well on your way to tackling your debts.
This week we’re looking at taking the first leap.
Get a pen and paper (or open up your computer)
The first step is that easy. If you’re aiming to tackle your debts, you need to know where you stand. Making a list of what you owe can feel surprisingly good and it will help you work out what you can do.
Use whatever you like for your list, a piece of paper, an app, a spreadsheet, or even a napkin. Got what you need? Great – you’re on your way. Let’s keep going.
Gather together all the letters from your lenders
You might be able to remember exactly who and how much you owe, but it’s good to double check so you can get the most accurate list together.
- If you never get paper statements and mostly deal with your lenders online open each account in a new tab.
- If you know you’re going to have to call a lender to find out about the status of your debt, write down their contact number next to their name.
- Open any letters you’ve been avoiding. We’ve all done it, and it’s likely this is going to be the hardest step but it’s a quick one. To be honest, there are probably just a handful of letters that are actually relevant. Find the letters that matter right now and then get rid of the rest.
Pretty easy so far, right?
Write a list
Start by going through each account one by one.
On your piece of paper write down:
- The name of the debt
- How much you still owe
- What the interest rate is
- If it’s a loan, also write down the payment deadline
You might have to give some lenders a call to find out where you currently stand, especially if you’ve requested annual statements.
If the list gets long, don’t panic. Be kind to yourself – relax, make a cup of tea, but don’t start on any other tasks. Most importantly, don’t give up. Just get to the end of this step.
Done? Great work - that’s the first bit out of the way. Head to step 2 when you’re ready to continue with your debt action plan.