I remember the day (or night actually) I got fed up and decided it was time to get out of debt once and for all. I was heavily pregnant lying in bed reading a book and I felt my baby kick.
Maybe it was exhaustion, maybe it was emotion, maybe it was hormones but I started weeping. I realized that if we continued in our current financial state we would always be in debt.
I would never get to leave work and stay home with my baby. We would never be able to pay for college or take our child on vacation or dream big.
It wasn't our income that was limiting us. It was our debt.
It felt insurmountable. It felt overwhelming. I liken it to a backpack full of bricks because that is exactly what it felt like. And in that moment at around 11:30 on a Sunday night I decided that was it. I was over it. We were getting out of debt.
But how do you get started?
Emergency fund? Yes. Setting a budget? Totally. But neither of these is the FIRST thing you do.
It is important when paying off debt and deciding to get in control of your finances to see what you're dealing with. This brings a level of sanity to an otherwise insane situation.
So the first thing I recommend doing is sitting down with a pen and a notebook and writing down who all you owe money to.
I am talking debtors and creditors not your everyday bills. We are only looking at debt right now.
Think of everyone you owe money to like Citi Bank or GM or Sallie Mae and write it down. Don't worry about any particular order or writing them largest to smallest, just get them all down on paper.
When you're finish total it all up and see what you're working with. Don't panic. It might be $10,000 it might be $110,000 but once you acknowledge it there is a level of sanity that probably wasn't there before.
Knowing the amount of debt you owe means that you can develop a plan. The destination is debt free and the dollar amount is all the stops you're going to make on this road trip.
What about you? What are you doing to bring sanity to your financial situation?