What You Actually Owe (And Why Looking Is Better Than Not Knowing)
A close friend came to me in college, overwhelmed by debt. He knew the feeling—the pit in his stomach when bills came, the anxiety about whether he could make payments that month. But the actual numbers? The full picture? He’d been avoiding it.
We sat down with pen and paper and listed everything out. What he discovered surprised him: the debt was bigger than he thought, AND the thing he was most stressed about wasn’t actually his biggest problem. There was another debt—higher interest, larger balance—that he’d been mentally minimizing. He hadn’t forgotten it exactly, but he’d pushed it to the back of his mind.
Painful as it was to see the real numbers, he felt relief for the first time. He could finally make a plan.
I’ve seen this pattern many times since. Most people who are stressed about debt don’t actually know how much they owe. They know the feeling. But the total? They’re avoiding it.
The fear of looking is almost always worse than the reality of knowing.
I want to be clear about something before we go further. Debt is deeply emotional. People carry shame about it. Many financial advisors—and family members, and society in general—make people feel judged for having debt.
I’m not here to judge you. I don’t care how you got here. My only objective is helping you manage it.
Here’s what to capture for each debt you have.
For every debt—credit cards, car loans, student loans, medical bills, financing deals, everything—write down:
Who you owe (creditor name), how much you owe (current balance), what it’s costing you (interest rate/APR), what you’re paying (minimum payment), when it’s due (due date), and any special terms (0% rate expiring, balloon payment coming, anything unusual).
Here’s what an entry might look like:
Debt #1: Chase Sapphire Visa Balance: $4,200 Interest Rate: 22.99% Minimum Payment: $105 Due Date: 15th of month Special Terms: None
Debt #2: Best Buy Financing Balance: $1,800 Interest Rate: 0% until March 2026, then 29.99% Minimum Payment: $50 Due Date: 1st of month Special Terms: 0% expires in 2 months—this is a ticking time bomb
Go through every debt you have. List them all.
Here’s what people typically discover when they do this.
The total is bigger than they thought. Not always by a lot, but enough to matter. The number you’ve been carrying in your head is usually an undercount.
Their mental priority was wrong. The debt they were most stressed about isn’t actually the most expensive or urgent. There’s often something else that should be getting their attention first.
There’s a forgotten debt. An old balance, a financing deal, something that slipped their mind. It’s still there, still accruing interest, still showing up on their credit report.
There’s a time bomb. A 0% rate that’s about to expire and jump to 29%. A balloon payment coming. Something they’d stopped thinking about that’s about to become a problem.
And then: relief. Finally knowing is better than fearing the unknown. Now there’s something to work with.
Before we talk about payoff strategy, there’s one myth worth clearing up.
Many financial advisors tell clients to keep their debt—especially “low interest” debt—and invest the money instead. “I’ll make you more than 7%.”
Let’s do the actual math.
Say you have $10,000 in debt at 7% interest. Your advisor says invest instead. To actually come out ahead, your investment needs to beat 7%. But that 7% debt payoff is a guaranteed, tax-free return. Your investment gains are neither.
Here’s what eats into your investment returns: federal capital gains tax (15-20% on gains), state capital gains tax (another 5%+ in many states), and advisory fees (typically 1% of assets annually). If you’re in a 15% federal bracket, 5% state, with 1% advisory fees, you need roughly 10% returns just to match paying off 7% debt—and that’s before accounting for the risk that the market doesn’t cooperate.
And here’s what nobody mentions: even if your investment doubles, you haven’t actually realized that gain until you sell. When you sell, you pay taxes, you lose the position, and you STILL have the debt. The debt payoff is certain, immediate, and tax-free. The investment gains are uncertain, future, and taxable.
For most people I’ve worked with, paying off debt is the better move. Not always—but almost always.
Once you know what you owe, there are two payoff approaches.
Option 1: Smallest Balance First (the Snowball). Pay minimums on everything except your smallest debt. Throw all extra money at the smallest balance. When it’s paid off, roll that payment to the next smallest. Why it works: psychological wins. You see debts disappear, which builds momentum.
Option 2: Highest Interest First (the Avalanche). Pay minimums on everything except your highest-interest debt. Throw all extra money at the highest rate. When it’s paid off, roll that payment to the next highest. Why it works: mathematical efficiency. You pay less total interest.
The honest answer: either one works if you stick to it. The “best” strategy is the one you’ll actually follow. Some people need the quick wins of snowball. Some people can’t stand paying extra interest and prefer avalanche. Know yourself.
A note for small business owners. If you run a business—even a side business—you probably have business debt mixed in with personal debt. Many small business owners I’ve worked with think in terms of “can I make this month’s payment” rather than “what is this debt actually costing me over time.”
Get both pictures: personal AND business. They’re connected but should be tracked separately.
And before taking on business debt, ask: can I design this in a way that doesn’t require borrowing? I built my consulting practice over 17 years without a business loan—through bootstrapping and careful growth. It’s not always possible, but it’s worth considering.
Here’s how to run this play.
Set aside 30 minutes this weekend. Gather every statement—credit cards, loans, financing deals, everything. Write down each debt using the format above. Add it up. Get the total.
Then identify which debt is actually the most urgent or expensive. It may not be the one you thought.
Pick your strategy: smallest first or highest interest first. And start.
If you’re worried you’ve forgotten something, pull your free credit report at AnnualCreditReport.com. Check your bank statements for recurring payments you’d forgotten about. Look through old emails for financing confirmations.
So where does this leave you?
If you’ve been avoiding the full picture, this weekend is the time to look. Thirty minutes. Pen and paper or a spreadsheet. Every debt listed out.
The people I’ve helped with debt all say the same thing afterward: they wish they’d done it sooner.