What's the first step to get out of debt?

Hiding from your debt won't help. Here's the first step towards breaking out of the debt cycle. 

Andrew Burton/Reuters/File
Occupy Wall Street demonstrators protest against the rising national student debt in Union Square, in New York in this file photo. Hamm offers his advice on the most important single step towards getting out of debt.

When the bills from my debts were coming in fast and furious, the last thing I wanted to do was to think about them. At all.

I would avoid the mailbox like the plague. If I had to check the mail, I’d take all of the bills and put them somewhere out of sight and out of mind.

When I finally had to pay bills once a month or so, I cringed, pushed through it all as fast as possible, and tried to forget about the huge amount of money I’d just paid to the banks.

I knew it was bad, but I really didn’t know how bad. I didn’t want to face it, so I just pushed it out of my mind.

Doing that didn’t actually help. It actually made things worse because by avoiding the facts I was allowing myself to dig a deeper and deeper debt hole. By not knowing how bad the situation was and just blindly making the minimum payments and hiding, I was allowing myself to continue a cycle of overspending, one that created a very, very deep hole for myself.

Sitting down and actually looking seriously at my debts was the key step in getting my financial house in order.

Rather than hiding from all of those bills, I took them all out at once and looked at the giant mess as a whole. It was bigger and scarier than I thought and the realization of how bad it was shocked me. It made me realize that things needed to change, and I used that picture of my debts as the foundation for that change.

This advice goes out there to everyone who has a big pile of debt that they don’t want to think about. Perhaps a relative or a friend sent you this article, or perhaps you yourself are worried enough about your debt situation that you’re Googling for information and getting a sick feeling in your stomach.

Here’s what I recommend that you do.

First, take out the most recent statement for every single debt that you have. Some of them might be online, others might be stashed away somewhere. Get out all of them. If you’ve got any that you’re “hiding” (like a credit card bill you’re hiding from a spouse or something), you have to include that, too.

Then, total up the current balance of all of those debts. Add them all up. Don’t worry about interest rates or anything else. What you’re looking for now is the true situation when it comes to your debt.

When you see that total, it’s going to be painful. It should be. That number is the truth. It’s not hiding anything. From now on, you shouldn’t hide anything, either. Make it your mission to drop that number down to zero. Over the next few weeks, we’ll talk about how to do just that.

This post is part of a yearlong series called “365 Ways to Live Cheap (Revisited),” in which I’m revisiting the entries from my book “365 Ways to Live Cheap,” which is available at Amazon and at bookstores everywhere. 

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