Most of us try not to think about our debt too often. We just make the necessary payments, watch the debits come out of our accounts after payday, and then struggle to scrape by until the next month, only to repeat the cycle.

Debt can be frightening, and many people avoid facing their total debt situation head-on. But we all know that ignoring something doesn’t make it disappear especially not debt.

This is the perfect opportunity to take a closer look at your debt and assess whether you’ve got everything 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.

Take Control of Your Debt This Year

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.