How to Calculate Debt

With so many sources of credit and loans available, it's easy to lose track of all your debt. Complicating things is that different credit cards, car loans, student loans and mortgage payments all have different interest rates and rules governing the minimum payments. However, calculating your debt is an essential first step to taking control of your financial situation, creating a budget and planning for the end of your debt.

Difficulty:

Moderately Easy

Instructions

Things You'll Need

• Monthly bill for all credit cards
• Records for student loans
• Record of car loan
• Record of mortgage
• List of miscellaneous debts

1. Create a table with columns for who you owe, what the debt is for, how much you owe, the current interest rate, the minimum monthly payments and the debt's status.

2. Fill in one line for each credit card you have. Put the name of the card in the who you owe column and what you bought using the card in the what the debt is for column. In the status column, write whether or not the card is in default.

3. Write each student loan you have in a single line. Remember that student loans are given out on a semester basis and that you may have taken out more than one each semester, which can add up to a lot of loans. Double check that you have included all of your student loans.

4. Enter your car loan in a new line. Again, list with whom you took out the car loan, that it is a car loan and the current outstanding balance. Under minimum monthly payment, list your current monthly payment.

5. Enter your mortgage in a new line. If you have taken out a second mortgage, enter that in its own line as well.

6. Fill in a line for any buy now, pay later purchases you have made. Include them even if they are not accruing interest and payment is not due yet. If they are not yet due, put zero in the interest and monthly payment columns.

7. Fill in one line for each overdue bill you have or taxes that you owe. In the interest column, fill in any fees you are charged for being overdue on the bills or taxes, if the taxes are also late.

8. Add one line for each loan you owe to a family member or friend. These may be informal and not have interest but are still a part of your debt.

9. Total the columns for how much you owe and the minimum monthly payments. This will show you the total amount that you owe and how much you must pay each month.

Tips & Warnings

• Keep your debt calculation and redo it every couple of months to see your progress.

• Compare the minimum monthly payments to the interest gains on each debt each month. Sometimes monthly payments do not cover the interest and only paying the minimum will result in the debt growing every month instead of being paid down.

References

• TransformYourMoney.com: How to Calculate Debt

Resources

• CNNMoney.com: Debt Reduction Planner