Lesson 1
Building your debt audit
List all your liabilities to understand your financial landscape and priorities.
Create the list
List every debt: credit cards, personal loans, and car payments. Include the total balance, the minimum monthly payment, and the current annual interest rate (APR). You cannot solve what you cannot see.
Setting the baseline
Calculate the total of all minimum payments. This is the amount you must pay regardless of your chosen strategy. Anything you pay above this amount is 'extra' that accelerates your path to freedom. Do not include household bills, only interest-bearing debt. Seeing the total debt figure can be overwhelming, but it is necessary for progress. By having this spreadsheet, you turn abstract anxiety into a concrete plan. Review this list every month to update balances as they decrease; seeing those numbers fall provides the motivation needed to continue.