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Life: The Sequel - Step 3

Size Up Your Credit and Debt Situation

We know. This step sounds a little scary – especially if you’re one of the many students graduating with both a degree and some student debt this year. But facing your credit and debt situation head on is a really important step if you want to set yourself in the right financial direction.

To get started, take a full and honest inventory of all of your debt—this includes your credit cards and any student loans you have. Then, take note of when your monthly payments are due. Note that the payment terms of your student loan may change once you finish school. For example, you may have only been paying interest while a student, but you’ll have to start paying back the principal at some point once you graduate. Check with your lender to make sure you’re up to speed on the exact repayment terms of your loan.

This step will help you gain financial awareness, and will also go a long way toward establishing a good credit rating. Because in case you didn’t know, protecting your credit rating is one of the most important things you can do for yourself financially—especially as you’re starting out. This means paying at least the minimum balance on your credit cards and loans every month. If you don’t, you could negatively affect your credit score, which can hurt your chances to borrow money down the road.

Tips to evaluate your credit and debt situation
  • Organize your debts in order of their interest rates. Make all of your normal payments so you don’t get behind, and put as much money as you can to the one with the highest interest rate. You’ll save on interest costs as you pay down your more expensive debt first.
  • Create a schedule of when your payments are due so you don’t miss any. If you’ve got debt in a few places, consider consolidating it into your lowest interest rate option.
  • Request a copy of your credit score. It’s quick, easy, and free, and it will show you exactly where you stand.
  • Try our Debt Reduction Planner to help you create a plan to pay down your debt.
"Take a full and honest inventory of all of your debt. This includes your credit cards and any student loans you have. Then, take note of when your monthly payments are due."