How Do You Calculate Debt?

Calculate debt, specifically your debt. This is the first step in living debt free. If paying off your debt is part of your money management plan then start by getting real about how much debt you have, and what it is costing you to keep it.

It may seem ominous, however it is straight forward and easy if you put your mind to it. If you get stopped, just take the next step and before you know it you will be done and know exactly how much debt you have.

That means you are one step closer to being debt free!

It’s time to fess up and get real about your debt.

Create a worksheet either in a spreadsheet program like MS Excel, or create a chart on paper (see example below - or click here for your FREE How to Calculate Your Debt worksheet that you can print and use).

Steps to Calculate Debt:

1. Gather Every Outstanding Statement You Have:
   
   To calculate debt, start by gathering the most recent statement for every outstanding debt you have. If you are missing a few, or have lost a statement, call the bank or company and ask them to send you a new one right away.
   
   You need to get an authentic and clear picture as to what your debt is. You want to be as close to reality as possible. There is no point in calculating your debt, designing a game plan to get out of it and then a few months later realize that you forgot a chunk of it. Wouldn’t that be devastating?
    
2. List ALL of your Debt:
   
   Get together following information and list your debt in your worksheet:

   • Your Credit Cards (ALL OF THEM!)  

   • Lines of credit statements for Loans (for whatever)

   • Vehicle financing

   • Student loans

   • Buy now pay later schemes (i.e. furniture stores or electronics) – even if you don’t have to pay for them yet

   • Outstanding bills, medical, utilities etc.

   • Taxes – income, property – all taxes due

   •  Domestic support not paid

   • In arrears Loans from family or friends

   • Pay advances from employers Pay advances from stores
      

3. What did you use the cards for?
   
   Write down what you used those cards for – on the worksheet – You want to get a sense on what you spent your money on and see how much interest you are paying on things like dinners out – doesn’t seem so yummy now does it? This is an important step not to be missed when you calculate debt. It gets you in touch with where you are spending your money and how you are accumulating debt!
    
4. Fill in the Limit for Each Credit Card or Debt
   
   Enter in the limit on each card.  This can be found on your statement usually under the title "Your Credit Limit". Total what your possible debt load is.
    
5. Fill in the Dollar Amount Owed on each Debt
   
   This is obviously the most important step to calculate debt. Enter in the dollar amount you owe for each debt. The is your "Account balance" shown on the part of the statement that shows what your minimum payment is. Total the column. 
   
   This shows you exactly how in debt you are. Don't be afraid.  Just be real about it. In fact congratulate yourself for having the courage to determine how much debt you actually have! Just get that you are in action and doing something about it. You are becoming aware of what it is exactly you owe.  With awareness comes power!
   
   Fill in the Interest Rate
   
   Enter in the Interest Rate for each debt.  This may take some investigating but is usually in the fine print.  Enter in the annual interest rate.  Compare what each debt is costing you in interest each year.
    
6. Enter the Minimum % Payment of Balance
   
   The next step to calculate debt is to enter in your minimum payment for each debt. Usually the minimum payment is calculated as a percent of the balance.  If your interest rate is high then your minimum payment may be less then the interest owed.  This means that you are now tacking on interest to your balance.  This is where your debt snowballs!
    
7. Calculate the Minimum Payment Each month
   
   Use the minimum payment percentage to determine what your minimum payment amount is.  Total this column and it will tell you how much money you need each month just to meet your minimum payments.
    

Sample Debt Schedule to Calculate Debt

To learn more about how to complete a Debt Schedule click here

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