2torial #0692:
Learn2 Get Out of Debt (continued)

Calculate your total debt

Now that you've made the decision to face your debts, you need to assess just how much you owe. Sit down and make a list of everything, including credit cards, personal loans, auto loans, and student loans. Don't forget to include all your outstanding home and utility bills, and any money you might owe friends and family.

Now, make a worksheet showing these outstanding balances plus any interest rates or managerial fees that apply. You'll also want to separately list your assets, including all savings, property, and investments.

Next, you'll need to compare what you owe against your net monthly pay (after taxes). In a perfect world, your debt is considered manageable if the total (not including your mortgage) is less than 20 percent of your net pay. If your debt totals more than 20 percent, don't panic--that's why you're reading this 2torial.

Note: If your debt is 80 percent of your income or more, your financial situation is very serious. It's time to get a second job or, as a very last resort, consider filing for bankruptcy. It's important to realize, however, that bankruptcy stays on your credit record for ten years, so you should consider every option available to you before taking this drastic route.