Know Your Numbers: Debt

NOTE:  This post is part of the Know Your Numbers Series, talking about how to find out and keep handy all your financial numbers. Before you can make smart choices about your finances, you have to know what you have, what you owe, and how you usually spend your money.

It's not always comfortable to know you owe money to other people, so it can be easy to stick your head in the sand and avoid it.  But it's important to know how much you owe, to whom you owe it, and what it's costing you.  Today is the day you stop being an ostrich!

Look up all the people and places you owe money, and write it all down in one spot.  Include the interest rate for each one.  Consider the following sources:

• Mortgage
• Student loans
• Credit card debt -- MasterCard, Visa, Amex, etc
• Store credit cards or payment plans (Leons, the Brick, Sears, etc)
• Car payments
• Money owed to family or friends
• If you're more than a month behind on any of your utility bills or rent, include that too.

Knowing how much you owe will help you get a full picture of your financial health.  Knowing how much interest you are paying on each will help you see the true cost of what you buy on credit.  these debts may not all be "bad" debt, or consumer debt.  A mortgage, for example, is a very reasonable type of debt to carry.  And car payments may make a lot of sense too, as long as you're aware of the full cost of the vehicle after you include the interest over time.  But it is still critical to know these numbers in order to understand your finances.