The first step to tackling debt

Man sorting bills

If you’re on a mission to get out of debt, it might initially seem like an impossible task. “Not true” says Cindy Gerry, Retail Sales & Services Manager, “The first and most important step in any debt reduction plan is also the simplest – you have to first find out exactly what you owe.”

“People usually come to us asking about debt reduction because of high interest debt types such as credit cards, but the first thing we always ask is to see the whole picture.” says Gerry. “Arm yourself with your statements and other information about what you owe, and then we can start coming up with a customized plan.”

If you’re not sure exactly what you owe, here’s how to start:

Get organized

If your financial records aren’t the tidiest, start by looking through your past mail for monthly statements for credit cards, car loans, and other debts to find your current balances and the interest rates you’re paying.  If you’ve thrown some statements away, you may need to call the lenders to get your current balance.

Check epost

Don’t forget to check epost if you’re signed up for it. Often people will sign up to get their bills electronically, thinking of the convenience, but will forget to check epost regularly and miss statements.

Get your credit reports

Equifax and Transunion are the two credit bureaus in Canada, and each will provide you a free credit report once per year. These reports will show a list of your outstanding debts, which can help you spot debts you’ve forgotten about (you also may spot some mistakes you need to correct with them!). Since different companies may report to different bureaus, it’s best to check both. Between the two reports you should be able to get a fairly complete list of what you owe.

Go through a final checklist:

Some types of debt seem to slip people’s minds more often when coming up with a list of their debts. Take a look at this list and remember if you have any of the following types of loans that aren’t on your list yet:

  • Credit cards
  • Personal loans or lines of credit
  • Payday loans
  • Car loans
  • Buy now pay later arrangements for big-ticket items like furniture or electronics. Because there’s often a long gap between when you take it home and when you’re obligated to pay, people forget about it and are then hit with all the debt (and interest) at once.
  • Overdue utility bills
  • Dental or medical
  • Student loans
  • Second mortgages

 What does it all come to?

“Adding it up can result in some initial sticker shock,” says Gerry. “When it’s broken up into $1,000 on one card and $3,000 on another it’s often hard for people to get the bigger picture of what they actually owe. But it’s important to do because knowing the whole situation lets us provide the best advice on how to manage the debt. The key is to come up with a plan about how quickly you want to have it paid off, and how you’ll get there.”

To see how long your debt will take to be paid off and if you might be able to save by consolidating, try our Loan Consolidation Calculator.