Where is your money going?

In my first financial post, I posed four questions to know the answers to in order to start moving towards financial success. The first question and fourth questions should be the easiest to answer. The first question was: How much money do I make? The fourth question was: Where is your money? So, we will cover the second and third questions separately in more depth. Today we will work on the second question: How much do I owe?
What you owe is the financial debts you have. Debts come from different sources and in vastly different amounts. The most common types of debt today are credit card debt, student loans, car loans, and mortgages. Not all debt is bad, but debt definitely causes stress in some situations. To start, you should be able to list your debt accounts with the following:

• Account type
• Total balance outstanding
• Payment amounts
• Interest rates
• Expected payoff date

Tackling excessive debt can be difficult, but the relief that comes with paying off a debt, relieves stress and encourages you to pay off the next debt. There are different methods to paying off debt. One way to pay off debt is to start with debt that has the highest interest rate (usually credit cards) and move on to debts with lower interest rates. Another method, which is great for a major psychological win, is to start with the smallest debt and pay it off as soon as possible. This victory of paying off a debt can be a big step forward for a lot of people. If you do get out of debt, you will need to find ways to prevent yourself from getting back into the debt trap.

Next time we will look into the question: Where does my money go? Feel free to comment or PM with questions.