The Hardest Step: Face Your Numbers

by | Nov 21, 2019

Do you ever get that feeling like you’re constantly making payments towards your debts but they just never seem to go down? They might even seem to stay at nearly the same amount month-after-month or even get bigger! 

Charlie wants to help you make all that change. You’re going to go from overwhelmed to completely in control and crushing your debt. This journey won’t be an overnight success. Some moments will be hard. Sometimes you might want to quit. But if you just stay this course, and get back up if you happen to fall down (and slipping up is okay!), you’re going to get to debt-free and it’s going to feel oh-so-good! 

So, how exactly are you going to magically take control? Well, it all starts with a potentially painful, but important exercise: facing your numbers. 

In fact, this part can be the hardest in the entire process. It’s easy to live in a state of avoidance when it comes to our debt. You just throw the required minimum monthly payment at the problem and try not to think about it again until the bill comes due next month. There’s no real strategy in this system. The “just-paying-the-minimum” strategy basically only keeps debt from being sent to collections, which tanks your credit score. Then, one day, many years from now, you’ll log in and see that you’ve finally paid off your debt plus a lot of interest.

But you deserve better than either of those realities. You deserve to feel confident with your money now. To not get a stomach ache when you think about your debt. You can and will get there, but it all starts with a little bit of money nerd behavior. 

Building Your Debt Spreadsheet

It’s impossible for you to make an effective debt payoff attack plan without first knowing exactly where all the bodies are buried. Okay, maybe that’s a far too dramatic turn of phrase — but it’s time for you to sit down and write out all and we mean all of your debt details. 

Here’s what you need to write down:

  • The type of debt you owe. Is it a student loan, credit card, auto loan, personal loan, payday loan, money borrowed from a friend or family member? (You could add mortgage on here too, but to be honest, there isn’t necessarily a need for you to aggressively pay down your mortgage.)
  • The lender. Who owns your debt? Is it Sallie Mae, a credit card company, or a personal loan provider?
  • Principal balance due. The principal balance is the total outstanding debt you owe to the lender. For example, when you get your credit card statement, it might say you owe $5,500 but that your minimum monthly payment is $165. The $5,500 is your principal balance.
  • Minimum payment. What’s the payment you owe to your lender each month? Spoiler: you can pay more than this minimum payment! In fact, paying more than the minimum due, even just a little bit, can save you lots of time and money over the course of paying off your loans. We’ll be discussing this further in the next post!
  • Interest rate. Write down the interest rates being charged on your debts. You can usually find this on a billing statement. If you’re completely unsure or having trouble finding your interest rate, then call your lender and ask directly. The interest rate is going to be a key factor to building your debt payoff attack plan when we talk about the debt avalanche strategy.

Here’s a spreadsheet you can use to start facing your numbers. 

TYPE OF DEBT LENDER PRINCIPAL BALANCE DUE MINIMUM PAYMENT INTEREST RATE


Now That You’ve Faced Your Numbers

Okay, you’ve gathered all the important intel! Now, it’s time for you to use this information to put a plan into action. Over the next few posts, we’ll analyze the different options you have to effectively (and quickly) get debt-free. Let’s start with a popular method that prioritizes psychology over mathematics: the debt snowball strategy. 

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