Listing your debts — the inventory step everyone skips

Most people who decide to get serious about paying off debt jump straight to picking a strategy, like which method sounds fastest or feels the most motivating. They skip the one step that actually makes any strategy work: writing down, in one place, every single debt they owe.

A full debt inventory lists each debt's creditor, current balance, interest rate, and minimum monthly payment. The interest rate matters most and gets skipped most often, because it's usually buried in a cardholder agreement, loan contract, or lending app's fine print rather than stated plainly on a monthly bill. Credit card interest in the Philippines is capped by the Bangko Sentral ng Pilipinas at a maximum of 3% a month, but personal loans, lending apps, and store financing can all charge very different rates, so the only way to know which of your debts is actually the most expensive is to look each one up individually.

Once every debt is listed, two numbers become impossible to ignore: the total amount owed, and the total minimum payment required every month just to stay current. Those two numbers are the real starting point for every method covered later in this course, and they're the same three debts used as a running example throughout: a ₱15,000 store credit card, a ₱45,000 general credit card, and a ₱30,000 personal loan.

Someone lists three debts: a store credit card with a ₱15,000 balance at 2% monthly interest and a ₱750 minimum payment, a general credit card with a ₱45,000 balance at 3% monthly interest and a ₱2,250 minimum payment, and a personal loan with a ₱30,000 balance at 1.5% monthly interest and a ₱1,500 minimum payment. Adding it up for the first time, they see a total of ₱90,000 owed and ₱4,500 required in minimum payments every month, a total they'd never actually calculated before.