FEBRUARY IS DEBT AWARENESS MONTH! 

Most of us try not to think about our debt too often. We just make the payments we need to make and we see the debits going off our account after payday and then we try scrape through to next month and do it all again.

Debt can be scary and so many people avoid taking a good look at their total debt situation. But we all know, that just because you avoid something that will not make it go away. Especially debt.

This is why February being National Debt Awareness Month gives you the perfect opportunity to take a good look at your debt and figure out if you have things under control.

How Much Debt Do You Have?

First, make a list of all the credit you have:  Loans, credit cards, overdrafts, clothing accounts, car finance or bonds. Get them down on paper. Try to write down the total debt owed. Check your statements or app to get balances.

Next, make sure you know how much you have to pay every month in debt instalments. This is the scary one. Checking that figure against what you earn (and have to spend on things like groceries and transport) is important. Do you have enough to cover your essentials and still pay your debts?

Finally, make a note of the interest amount or fees that you are paying on each of those debts. This can help you identify which debts you might want to focus on paying off first. Accounts with high charges and lots of interest cost you a lot of extra money over time.

Making A Plan For Your Debt

If you just go from month to month blindly making debt payments, you will never get out of debt. You need to get the big picture so that you can make a plan.

Paying off debt is not a race. You will probably need to pay off your debt for some time. Still, it is important to have a realistic plan of which debts to pay off first and how soon you can do that. When deciding which debts to focus on paying off, you can try one of two main strategies:

• Pay off the smaller debts first (and then use that money to pay off other debts)

• Pay off the debts with the highest interest rates and fees.

Both options work well but you will only know which to use once you get a better look at your debts.

Just as you might go to the doctor to get a check up or a dentist to have a look at something that is bothering you, you can also consider talking to a professional debt counsellor about your debt situation. They can help you figure out what your options are.

Start The Year Right

So, grab a pen and paper, get out all your statements and have a look at all your debts, even if it feels scary. Once you better understand your debt situation you will be able to make a realistic plan for paying it off over time.