How Do I Know How Much Debt I'm In?

Youll have a hard time finding an adult who doesnt have at least one student loan, credit card, mortgage or car loan. According to USA Today, debt among college students is at record levels. Students are relying on credit cards to pay for their educational expenses. In the book "The Road to Wealth," it states that debt makes it almost impossible to save or invest money. Until you know the amount of your debt, you cannot gain control of your finances.

Make a List of Your Debts

An excellent way to find out what you owe is to write it down. Get a notebook, gather your bills, and write the names of creditors and how much you owe each one. Focus on debts you can get rid of by paying them in full.

Debt such as credit cards, student loans, personal loans, mortgages and car loans belong on the list. Exclude ongoing expenses such as rent and utilities, unless youre behind in payments.

Add all of your expenses together. Do this by hand or with financial software such as Quicken. The total will show you the extent of your debt. Once you have the total amount, youll have a clear idea about how much you owe.
If you dont want the hassle of gathering all of your bills, you can check your credit report instead.

Credit Report

Your credit report provides the facts about your debt. Your accounts are listed by type of loan. If you have credit card accounts, mortgages, students loans, bank loans or credit union loans, youll see them on the report. Youll also see when the accounts were opened, how much you owe and your payment history.

Using the information from your credit report saves time. Instead of waiting to receive all of your bills in the mail, you can see everything at once on the credit report. To see how much you owe, simply add all of your debts together.

Its possible that not all of your debts will appear on the report. Medical expenses, personal loans from friends and family, pawn shop tickets and things of that nature will have to be written down separately.

AnnualCreditReport.com(see resource 2) is a federal website that allows you to check your credit report for free. You can get one copy of your credit report from all three credit reporting agencies. The three agencies are TransUnion, Equifax and Experian.

It helps to see a lump sum of how much you owe. If the majority of your income is spent on debts, then you need a budget or financial counseling.