by Christy Bieber | July 21, 2019
Knowing what you owe is the first step to making a debt payoff plan. Unfortunately, when you have lots of different kinds of debts, it can be hard to figure it out. The good news is, it's very simple to figure out your total debt balance. You'll just need to take five easy steps:
Going through this process is important because knowing exactly what your debt obligations are gives you the best chance to make a plan to pay off what you owe and become debt free.
There are three major credit reporting agencies: Equifax, Experian, and TransUnion. Companies you owe money to report your debt balances to these credit reporting agencies. This includes credit card companies, mortgage companies, and other loan lenders.
Since your credit report contains the details about virtually all your debts, it's a good place to start when figuring out what you owe. You're allowed to get a free copy of your credit report from each of these three major credit reporting agencies once per year by visiting AnnualCreditReport.com. Simply go to this website, select which report you want, and provide the required information including your Social Security number and your current and past addresses.
Your credit report will be delivered to you instantly online and you can use the information it contains to find out your total debt balance.
Your credit report shows not just open accounts, but also accounts that have been charged off, discharged, or paid in full. When you're trying to figure out your total debt balance, you want to focus on open accounts where creditors could try to collect from you.
If debt is charged off, the creditor that you originally owed has given up on trying to collect it -- but a collection agency may aim to get the money from you and can pursue claims against you unless the statute of limitations for collecting on debt has expired. If debt has been discharged in bankruptcy, on the other hand, it is no longer collectible -- you don't need to worry about including the account in your total loan balance.
Remember, your credit report is just a snapshot in time, as creditors typically report on your account balance and payment history just once a month. If you have an open credit card account, you should include it on your list of debts even if the balance reported on your credit report is $0, as you may have charged something on that account since the last time the creditor updated the reporting agency.
If you have online access to all of the current accounts on your credit report, you can sign into each account to see the current debt balance you owe. If you don't, you may have to call the creditor. You should be ready to provide your account number, if you know it, but creditors can usually look up your account based on your Social Security number if you don't.
Call every creditor or sign in online to every open account to find out the current balance owed. You may also wish to write down the monthly payment and interest rate, as this information can help you make a debt payoff plan.
As you make payments, this debt balance will go down. But it won't go down by the full amount of your payment. That's because a portion of your payment goes to covering interest every month. If you make a $100 payment on a $1,000 loan and $50 of it goes to interest, then you'd only reduce your loan balance by $50 every month. So, if you want to keep a running tally of your total debt balance, you'll need to look at your statements and see how much each payment reduces what you owe.
Sometimes companies don't alert the credit reporting agencies to your outstanding accounts. While this isn't common, you'll want to make sure you include any debts not reported on your credit report when figuring out your total loan balance.
You can look back at old billing statements or check your online bank statements to see what payments you made to help refresh your memory about whether you have any outstanding debts that weren't accounted for on your credit report.
Now you know how to figure out the total amount you owe. Simply obtain your credit report, make a list of the accounts on it, call your creditors or sign into online accounts, and write down the outstanding balance on each debt. Include only debt that can be collected -- not any debts that have been discharged in bankruptcy or that creditors can no longer collect because the statute of limitations has passed.
Then, add up the balances on everything you owe and you'll know exactly what your outstanding financial obligations are. And remember to add in any debts not listed on your credit report by referencing past statements to find others you may owe money too.
Once you've done this, you can make a plan to repay what you owe if you hope to become debt free.
Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts can earn you more than 12x the national average savings account rate. Click here to uncover the best-in-class picks that landed a spot on our shortlist of the best savings accounts for 2021.
We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from Bank CD rates editorial content and is created by a different analyst team.
Best CD Rates service that rates and reviews essential products for your everyday money matters.
Copyright © 2018 - 2021 The Ascent. All rights reserved.