Welcome to the first part of our 7-part series on tackling debt. If you're here, it means you're ready to take control of your financial situation and find a way out of debt. This journey won't be easy, but it's absolutely possible. In this post, we'll start by facing the facts and assessing your current financial situation.

STEP 1: ACKNOWLEDGE YOUR DEBT

It's crucial to confront the reality of your debt. This can be intimidating, but knowing exactly where you stand is the first step towards recovery.

STEP 2: LIST ALL YOUR DEBTS

Create a comprehensive list of all your debts. Write it down.  This will be uncomfortable.  Don’t judge yourself.  Things happen.  Life happens.  The only way to take control is to know exactly what you’re dealing with.

Be sure to include:

• Credit card balances

• Personal loans

• Student loans

• Medical bills

• Car loans

• Mortgages

• Any other outstanding debts

For each debt, note down the following details:

• Creditor’s name

• Total amount owed

• Minimum monthly payment

• Interest rate

STEP 3: CALCULATE YOUR TOTAL DEBT

Add up all the amounts owed to get a clear picture of your total debt. This number may be overwhelming, but remember, you are taking the first step towards eliminating it.  You’ll use this amount later to see how far you’ve come, after you’ve paid down a few things.  Remember, this is just a number – it doesn’t affect your value as a person.

STEP 4: UNDERSTAND YOUR MONTHLY PLAN

To understand your debt and how it relates to your income, you need to know your monthly budget/plan. List all sources of income and all monthly expenses.
Be sure to include everything:

• Rent/mortgage

• Utilities

• Groceries

• Transportation

• Insurance

• Entertainment

STEP 5: DETERMINE YOUR DISPOSABLE INCOME

Disposable income is the amount of money you have left after you've paid all your taxes. It's essentially the money you can use for spending, saving, or investing. Think of it as your take-home pay that you can freely use for your personal needs and wants, after meeting all your tax obligations.

To determine your disposable income, subtract your total monthly expenses from your total monthly income to find out how much money you have left over each month. This amount will help you understand how much you can potentially put towards debt repayment.

You've now taken the crucial first steps in tackling your debt. You've acknowledged it, listed it, calculated your total debt, understood your monthly budget, and determined your disposable income. In the next part, we'll explore how to set realistic financial goals and create a plan to start paying off your debt. Read it here.

Here are a few online apps that can help.  ChangeMakers Hawaiʻi is not affiliated with any of these sites.  We want to provide you with tools to help you succeed.

Debt Payoff Planner: Allows you to input your debts and create a payoff plan. Click the image to visit their site.

CreditKarma: Provides a detailed overview of your debts, credit score, and credit reports. Click the image to visit their site.

Remember, you're not alone on this journey. We're here to help you every step of the way.  Want more help and advice, consider signing up for ChangeMakers Hawaiʻi’s Kanakanomics program.