From excessive holiday shopping to mortgages, anything can lead us astray that road to financial wellness. If we don’t keep track of where we’re going, we end up lost in the jungles of debt. How to Escape the Jungles of Debt Part I will help build a road map to navigate us back to financial safety.
Step 1: Gather Your Materials
The first step to building your map is to collect the proper information. Here’s what you need:
- Recent CFCU eStatements – all credit cards and loans, including student loans
- Latest Credit Reports – check for accuracy
- Credit Score – may be eligible to lower interest rates or for a debt consolidation loan
Step 2: Figure Out Your Terrain
Once you have the materials, you need a lay of the land in order to piece together your map. This part of the map should include:
- Monthly Income – baseline to paying down debt
- Creditor’s Name – who you have debt with
- Balance – how much debt you have with the creditor
- Minimum Monthly Payment – the least amount you need to pay
- Interest Rate – the extra percentage you owe
By combining this information with where you’ve been spending money for the last 3 months, you will have a complete picture of how to handle your debt.
Step 3: Map the Road Back
The last step in completing your map is to find the best path back to Financial Wellness Road. You know how much money is coming in, what necessary expenses you have, and how much you can use towards debt repayment.
Monthly Income - Necessary Expenses = Debt Repayment $$$
Your debt repayment total is your track back. It will let you know how much you have available to starting paying those debts off and finding your way out of the jungle. Just make sure you stay the course. We don’t want to get lost again trying
to find out way back.
Now that you have a completed map, check out How to Escape the Jungles of Debt Part II – Be Aware of Your Surroundings to help you traverse the pitfalls and traps you may find along the way.