How to Get Out of Debt - Determining Your Actual Debt

When you get to the point where you are ready to take serious action regarding your debt, the first thing that you will need to do is determine exactly how much debt you actually have. You may have an idea in your head, but the truth is that most people do not know exactly how much money they owe. The issue gets even more complicated if you are married since your spouse may have debt that you are not aware of or vice versa. The first step to clearing this matter up is to dig out all of your monthly bills and write them down.

Each individual is entitled to one free credit report per year from each of the three main credit reporting bureaus. This means that if you request one report every four months, you will be able to accurately monitor your credit rating as well as protect yourself from identity theft. You may also want to consider requesting all three of your credit reports at the same time if you are more concerned with accurately determining the baseline of your debt. One reason to seriously consider doing this is the fact that not all of your lenders are likely to report credit activity to each of the bureaus.

In order to determine more precisely your family's financial health, you will need to create a list of all of your household expenditures. The first thing to take into account is the necessities. Many experts recommend ranking necessities in the following order of importance. Food is probably the most important necessity followed by housing then utilities. If you have transportation costs they would be number four on your list followed by child-support. Once you have listed your expenditures for these items, you can then move on to the secondary expenditures.

Taxes and student loans are your crucial second tier expenditures since failing to pay these on time can result in garnishment of wages and possibly even Social Security benefits. Fortunately, the government is often very willing to work with individuals who are having difficulty making their payments. It is much easier to work out a payment arrangement with the government ahead of time rather than dealing with the results of ignoring your obligations to them altogether. Your third list of expenditures are also your least crucial. These will include all of your other debts ranging from credit cards to department store debts.