Day 4: Debt Inventory & Mapping – Facing the Number You’ve Been Avoiding

Welcome to Day 4 of the 30-Day Organize Your Ish Challenge. You’ve set your intention, gathered your documents, created your command center, and pulled your credit report. Today, we’re tackling something that might feel even harder, your debt.

I’m not going to sugarcoat this: today might be uncomfortable. You might feel shame, anxiety, or overwhelm. You might discover you owe more than you thought. You might confront financial decisions you regret.

But by the end of today, you’ll have something powerful: complete clarity, a strategic roadmap, and a concrete plan to move toward both debt freedom and homeownership.

The Truth About Debt and Shame

Before we dive into numbers and strategies, we need to talk about the emotional weight of debt.

For most people, debt isn’t just a financial reality, it’s wrapped up in feelings of failure, embarrassment, and shame. Every time you see that credit card balance, you might hear a voice in your head saying:

“You should have known better”
“Everyone else has their life together except you”
“You’re never going to get out of this”
“You’re not responsible enough to own a home”

Let me tell you something right now: debt is not a moral failing.

Debt happens for countless reasons, many of which are completely outside your control:

Medical emergencies that insurance didn’t cover
Job loss during economic downturns
The necessity of student loans to pursue education
Car repairs when you have no emergency fund
Basic survival during periods of unemployment
Supporting family members in crisis
The rising cost of living outpacing wage growth

Even when debt results from what you might consider “mistakes,” those decisions were made with the information, resources, and emotional capacity you had at that moment. They don’t define your worth or determine your future.

Why We Avoid Looking at Our Debt

There’s a reason you might have been dreading this day. Avoidance is a protection mechanism. If you don’t look at the total, you don’t have to feel the full weight of it. If you don’t add it all up, you can maintain a comfortable level of denial.

But here’s what avoidance costs you:

Missed opportunities to negotiate lower interest rates
Continued payments on debts that could have been consolidated
Growing balances from accumulating interest
Damage to your credit score from missed or late payments
Increased anxiety from the constant low-level stress of not knowing
Delayed progress toward homeownership

The number exists whether you look at it or not. The difference is that once you face it, you can actually do something about it.

Why Debt Matters for Homeownership

Let’s talk about the practical reason we’re doing this work today: your debt directly impacts your ability to buy a home.

When you apply for a mortgage, lenders evaluate your debt-to-income ratio (DTI). This is one of the most important factors in their decision.

Understanding Debt-to-Income Ratio (DTI)

Your DTI is calculated by dividing your total monthly debt payments by your gross monthly income (before taxes).

The formula: (Monthly debt payments ÷ Gross monthly income) × 100 = DTI%

What counts as debt payments:

Credit card minimum payments
Auto loan payments
Student loan payments
Personal loan payments
Other mortgage or rent payments
Child support or alimony payments
ANY recurring debt obligation

What doesn’t count:

Utilities
Phone bills
Insurance (unless financed)
Groceries
Gas
Subscriptions (Netflix, gym, etc.)

DTI Thresholds That Matter

For conventional mortgages:

36% or below: Excellent, best rates and terms
37-43%: Acceptable, standard approval
44-49%: Difficult, limited options
50% or above: Very difficult to get approved

For FHA mortgages:

43% or below: Standard approval
44-50%: Possible with strong compensating factors
Above 50%: Very difficult

Real Example of How DTI Impacts You

Let’s say you earn $4,500 per month (gross):

Scenario A: High DTI

Credit cards: $400/month
Auto loan: $450/month
Student loans: $300/month
Personal loan: $200/month
Total debt payments: $1,350
DTI: 30% ✓ Good position

Scenario B: Very High DTI

Credit cards: $600/month
Auto loan: $500/month
Student loans: $400/month
Personal loan: $300/month
Medical payment plan: $150/month
Total debt payments: $1,950
DTI: 43% ⚠ At the limit

In Scenario B, you’re right at the edge of what most lenders will accept. If your DTI is at 43% before your mortgage, lenders worry that adding a mortgage payment will push you over the edge financially.

The takeaway: Reducing your monthly debt payments directly improves your chances of mortgage approval and gets you better interest rates.

Creating Your Complete Debt Inventory

It’s time to face the full picture. Grab a notebook, open a spreadsheet, or use a debt tracking app. We’re going to list every single debt you have with specific details.

Category 1: Credit Card Debt

This is often the most emotionally charged category. For each credit card, write down:

Information needed:

Card name/issuer (Chase Sapphire, Capital One Quicksilver, etc.)
Current balance
Credit limit
Minimum monthly payment
Interest rate (APR)
Statement due date
Whether it’s a rewards card, store card, or balance transfer card

Don’t forget:

Store credit cards (Target, Macy’s, Best Buy, furniture stores)
Gas station cards (Shell, BP, etc.)
Medical credit cards (CareCredit for dental/medical procedures)
Cards you’re an authorized user on (if you’re responsible for payment)
Cards you haven’t used in months or years but still have balances

Questions to answer:

Which card has the highest interest rate?
Which card is closest to its limit (highest utilization)?
Are any cards currently past due?
Have any cards been charged off or sent to collections?

Category 2: Student Loans

Student loans can be particularly complex because you might have multiple loans with different servicers and terms.

For each loan, document:

Loan servicer (Nelnet, Navient, Great Lakes, etc.)
Loan type (federal subsidized, unsubsidized, private, PLUS, etc.)
Original loan amount
Current balance
Monthly payment amount
Interest rate
Repayment status (active, deferment, forbearance, income-driven plan)
Remaining term

Federal vs. Private matters:

Federal loans have more flexible repayment options
Federal loans qualify for income-driven repayment plans
Federal loans may qualify for forgiveness programs
Private loans typically have fewer protections

Important questions:

Are you on the best repayment plan for your situation?
Are you eligible for any forgiveness programs (public service, teacher, etc.)?
If you’re in deferment or forbearance, is interest still accruing?

Category 3: Auto Loans

Information needed:

Lender name
Current balance owed
Original loan amount
Monthly payment
Interest rate
Remaining months/years of payments
Current vehicle value (check Kelley Blue Book or Edmunds)

Important calculation: Are you upside down on your loan? (Owe more than the car is worth)

Current balance: $15,000
Current car value: $12,000
Upside down by: $3,000

Being upside down isn’t necessarily bad, but it’s information you need to have.

Category 4: Personal Loans

These can come from various sources:

Bank or credit union personal loans:

Original loan amount
Current balance
Monthly payment
Interest rate
Payoff date

Peer-to-peer loans (LendingClub, Prosper, Upstart): Same information as above

Payday loans: If you have any of these, they need immediate attention due to extremely high interest rates (often 300-400% APR)

Family or friend loans: Yes, these count. Even if there’s no formal paperwork, if you owe someone money and intend to pay them back, list it:

Who you owe
Amount borrowed
Amount paid back so far
Remaining balance
Any agreed-upon payment schedule

Category 5: Medical Debt

Medical debt is one of the most common forms of debt in America. It often comes as a surprise and can feel particularly unfair.

What to document:

Provider or collection agency name
Original amount billed
Current amount owed
Whether you have a payment plan
Interest rate (many medical providers don’t charge interest if you’re on a payment plan)
Whether it’s been reported to credit bureaus

Types of medical debt to include:

Hospital bills
Doctor and specialist bills
Emergency room visits
Ambulance bills
Dental work
Vision care
Mental health services
Prescription costs
Medical equipment
Physical therapy

Important note: Medical debt under $500 is no longer reported to credit bureaus as of 2023, and paid medical debt is removed immediately.

Category 6: Tax Debt

Owing money to the IRS or state tax agencies is serious and needs special attention.

Document:

Type (federal or state)
Tax year(s) owed
Original amount owed
Current balance (including penalties and interest)
Whether you have a payment plan
Whether any liens have been filed

Important: Tax debt doesn’t go away and can result in wage garnishment or liens on property. If you owe taxes, contact the IRS or state agency to set up a payment plan.

Category 7: Other Debts

Don’t let anything slip through the cracks:

Child support or alimony:

Current balance if behind
Monthly payment amount

Court judgments:

Who obtained the judgment
Amount
Payment plan status

Back rent or utilities:

Landlord or utility company
Amount owed
Whether it’s gone to collections

Buy-now-pay-later services (Affirm, Afterpay, Klarna, etc.):

Merchant/service
Original purchase amount
Remaining balance
Payment schedule

Pawn shop loans:

Item pawned
Loan amount
Interest rate
Deadline to reclaim item

Title loans:

Lender
Amount borrowed
Interest rate (often 25% per month or 300% APR)
Vehicle at risk

401(k) loans:

Amount borrowed
Repayment terms
Impact on retirement savings

Calculating Your Total Debt Picture

Now that you’ve listed everything, it’s time to calculate the totals. This might be the hardest part emotionally, but it’s also the most empowering.

Key Calculations:

1. Total Debt by Category

Total credit card debt: $______
Total student loan debt: $______
Total auto loan debt: $______
Total personal loan debt: $______
Total medical debt: $______
Total other debt: $______
TOTAL DEBT: $______

2. Total Monthly Debt Payments Add up all your minimum monthly payments across all debts: $______

3. Your Debt-to-Income Ratio (Monthly debt payments ÷ Gross monthly income) × 100 = ______%

4. Weighted Average Interest Rate This tells you what you’re paying on average across all debts: (Sum of: [balance × interest rate] for each debt) ÷ Total debt = Average rate

5. Highest Interest Debt Which single debt has the highest APR? This is costing you the most.

6. Smallest Balance Debt Which debt has the lowest balance? This could be your first quick win.

What Your Numbers Mean

Let me give you some perspective on where you stand:

Total Debt Amount:

Under $5,000: Very manageable, could pay off in 6-12 months with focus
$5,000-$15,000: Common range, 12-24 months with consistent effort
$15,000-$50,000: Substantial, but achievable with 2-5 year plan
$50,000-$100,000: Significant (often including student loans), 5-10 year plan
Over $100,000: Long-term commitment needed, but homeownership still possible

Remember: The median American household has about $145,000 in debt (including mortgages). Without mortgages, the median is around $25,000. You’re not alone.

Debt-to-Income Ratio:

0-20%: Excellent, lenders love you
21-35%: Good, strong approval chances
36-43%: Acceptable, workable for homeownership
44-50%: Challenging, need to focus on debt reduction
51%+: Priority should be debt reduction before homeownership

The Emotional Reality Check

Take a moment and look at your numbers. All of them. The total debt. The monthly payments. The interest rates.

How are you feeling?

If you’re feeling overwhelmed: That’s completely normal. You’re seeing the full picture, possibly for the first time. Give yourself permission to feel this.

If you’re feeling ashamed: Remember that debt is not a character flaw. It’s a financial situation. Millions of people carry debt. You’re taking action to change it.

If you’re feeling angry: That’s okay too. Maybe you’re angry at yourself for past decisions. Maybe you’re angry at circumstances beyond your control. Channel that anger into motivation.

If you’re feeling relieved: Sometimes seeing the full picture is actually less scary than the unknown. At least now you know what you’re dealing with.

If you’re feeling hopeless: I need you to pause right here. Your debt is a problem with a solution. It might take time, but it’s absolutely solvable. People with far more debt have become homeowners. You can too.

Reframing Your Debt Story

Before we move into strategy, I want you to try something. Look at your debt list again, but this time, ask different questions:

For each debt, ask:

What did this debt provide me?
What was happening in my life when I took on this debt?
Was this debt necessary for survival or advancement?
What have I learned from this debt?

You might realize:

Student loans gave you education and career skills
Medical debt meant you got necessary healthcare
Auto loans provide transportation to your job
Credit card debt covered emergencies when you had no other option
Some debt represents investments in yourself or your family

This isn’t about making excuses. It’s about removing shame and seeing debt as what it actually is: a financial tool that you used for various reasons, some wise, some necessary, some you’d change if you could go back.

The past is done. What matters now is the path forward.

Creating Your Debt Payoff Strategy

Now let’s turn your debt inventory into a strategic roadmap. There are several proven approaches, and the best one is the one you’ll actually stick with.

Strategy 1: The Avalanche Method (Maximum Savings)

How it works: Pay minimum payments on all debts except the one with the highest interest rate. Put every extra dollar toward that highest-rate debt until it’s eliminated, then move to the next highest rate.

The math:

Credit Card A: $5,000 at 24% APR ← ATTACK THIS FIRST
Credit Card B: $3,000 at 19% APR ← Next
Personal Loan: $8,000 at 12% APR
Student Loan: $20,000 at 5% APR ← Last

Advantages:

Saves you the most money in interest over time
Mathematically optimal approach
Reduces the total time to become debt-free
Your money works most efficiently

Disadvantages:

May take longer to see your first debt eliminated
Requires patience and motivation from watching numbers slowly decrease
No quick wins for psychological boost

Best for:

People motivated by logic and math
People with discipline and patience
People with significant high-interest debt
People who want to minimize total interest paid

Example timeline: With $500/month extra toward debt:

Month 1-10: Pay off Credit Card A ($5,000)
Month 11-16: Pay off Credit Card B ($3,000)
Month 17-32: Pay off Personal Loan ($8,000)
Continue with student loan…

Strategy 2: The Snowball Method (Maximum Motivation)

How it works: Pay minimum payments on all debts except the one with the smallest balance. Attack that smallest debt first, regardless of interest rate. Once it’s paid off, take that payment amount and add it to the next smallest debt.

The ordering:

Medical Bill: $500 ← ATTACK THIS FIRST
Credit Card B: $1,500 ← Next
Credit Card A: $5,000
Auto Loan: $8,000
Student Loan: $20,000 ← Last

Advantages:

Quick wins provide psychological boost and momentum
Seeing debts disappear keeps you motivated
Each paid-off debt frees up cash flow
Builds confidence in your ability to become debt-free
“Snowball” effect as payments grow larger with each debt eliminated

Disadvantages:

May pay more in total interest
Mathematically less efficient
High-interest debt continues growing while you pay off low balances

Best for:

People who need frequent wins to stay motivated
People with many small debts
People who’ve started and quit debt payoff before
People who struggle with delayed gratification

Why it works psychologically: When you pay off that first small debt, your brain gets a dopamine hit. You feel successful. That feeling motivates you to tackle the next one. Before you know it, you’ve built momentum.

Strategy 3: The Debt Consolidation Approach

How it works: Combine multiple high-interest debts into one lower-interest loan or balance transfer credit card.

Options:

Balance transfer credit card: 0% APR for 12-21 months (typically 3-5% transfer fee)
Personal consolidation loan: Fixed interest rate, fixed payment, fixed term
Home equity loan or HELOC: If you’re already a homeowner (not applicable yet)

Example: Current situation:

Credit Card A: $5,000 at 24%
Credit Card B: $3,000 at 19%
Credit Card C: $2,000 at 22%
Total: $10,000, average rate ~22%

After consolidation:

Balance transfer card: $10,000 at 0% for 18 months
Or personal loan: $10,000 at 8% for 5 years

Advantages:

Single payment instead of multiple
Lower overall interest rate
Can save hundreds or thousands in interest
Simplifies debt management
Can accelerate payoff significantly

Disadvantages:

May have balance transfer or origination fees
Requires decent credit to qualify for good rates
Risk of running up new balances on paid-off credit cards
Promotional rates eventually expire

Best for:

People with good credit (usually 670+)
People with multiple high-interest credit card balances
People who won’t run up new credit card debt

Critical warning: If you consolidate credit card debt, DO NOT use those cards again. Cut them up if you have to. Otherwise, you’ll end up with both the consolidation loan AND new credit card debt.

Strategy 4: The Hybrid Approach (Balanced Strategy)

How it works: Combine elements of avalanche and snowball for both efficiency and motivation.

Approach A: Quick Win First, Then Avalanche

Pay off your smallest debt first (quick psychological win)
Then switch to highest interest rate for remaining debts

Approach B: Alternate Method

Identify highest interest debt over $1,000
Identify smallest debt under $500
Pay off the small one first
Then attack the high-interest one
Continue alternating pattern

Approach C: Category-Based

Group debts by type (all credit cards, all medical bills, etc.)
Attack one category completely before moving to next
Within each category, use avalanche or snowball

Best for:

People who want both motivation and efficiency
People with diverse types of debt
People who need flexibility in their approach

Strategy 5: The Homeownership Priority Method (Recommended for This Challenge)

This strategy focuses specifically on debts that most impact your mortgage approval.

Priority order:

Collections and charge-offs (severely damage credit scores)
High credit card balances (hurt DTI and credit utilization)
Past-due or delinquent accounts (immediate credit score damage)
High-interest debt (expensive and affects DTI)
Other debt in good standing (address after priorities 1-4)

Why this works for homeownership:

Directly improves credit score (collections and delinquencies hurt most)
Lowers DTI ratio (reducing monthly payments helps mortgage approval)
Reduces credit utilization (major factor in credit scoring)
Addresses lender red flags first

Example application:

Month 1-2: Pay off $600 medical collection ← Removes credit score damage
Month 3-6: Pay down credit cards from 80% to 30% utilization ← Boosts score
Month 7-8: Catch up $400 past-due personal loan ← Stops score bleeding
Month 9+: Attack highest interest rate debt ← Reduces DTI and saves money

Creating Your Personal Debt Roadmap

Now it’s time to create your specific plan. Choose which strategy resonates most with you, then set concrete goals.

Your 30-Day Goal

Which debt will you attack first? Name: _______________ Current balance: $_______________ Target extra payment: $_______________ Goal: Pay down by $_______ or pay off completely

How will you find extra money?

Cut expenses: $_______
Increase income: $_______
One-time money (tax refund, bonus, etc.): $_______
Total extra toward debt: $_______

Your 90-Day Goals

Which debts will be eliminated or significantly reduced?

_______________ (paid off or reduced by $______)
_______________ (paid off or reduced by $______)

What will your DTI be? Current DTI: ______% Target DTI: ______%

What will your credit utilization be? Current utilization: ______% Target utilization: ______%

Your 6-Month Goals

Total debt reduction target: $_______ Number of debts to eliminate: _______ DTI ratio goal: % Credit score goal: _______ Progress toward down payment savings: $_

Your 12-Month Vision

Total debt paid off: $_______ Remaining debt balance: $_______ DTI ratio: % Credit score: _______ Down payment saved: $_ Ready to start house hunting? Yes / Not yet

Practical Action Steps to Accelerate Payoff

Beyond choosing a strategy, here are concrete actions you can take to speed up your debt payoff:

Find Extra Money

Cut expenses (even $10-20 helps):

Review subscriptions and cancel unused ones
Reduce dining out by cooking more
Switch to generic brands for groceries
Lower phone or internet plan
Cut cable or reduce streaming services
Shop your insurance rates
Brew coffee at home instead of buying daily

Increase income:

Ask for overtime at your current job
Start a side gig (delivery, freelancing, tutoring)
Sell items you no longer need
Rent out a parking space or storage
Pet sitting or house sitting
Online surveys or gig apps (small but steady)

Use windfalls strategically:

Tax refunds → 50% to debt, 30% to emergency fund, 20% to yourself
Work bonuses → at least 70% to debt
Birthday or holiday money → debt
Rebates or refunds → debt

Reduce Your Interest Rates

For credit cards:

Call and ask for a lower rate (success rate is surprisingly high)
Transfer balances to 0% APR cards if qualified
Negotiate based on improved credit score or payment history

For student loans:

Refinance private loans if credit has improved
Consider consolidation for federal loans
Switch to income-driven repayment if struggling

For personal loans:

Refinance if credit score has improved significantly
Check credit unions for better rates than traditional banks

Automate Everything

Set up automatic payments for:

Minimum payments on all debts (prevents late fees and credit damage)
Extra payments on target debt (consistency is key)
Transfers to savings (pay yourself too)

Pro tip: Schedule payments for right after payday when money is available.

Prevent New Debt

While paying off debt:

Freeze credit cards in a block of ice (literally)
Remove credit card info from online shopping sites
Use the 48-hour rule (wait 48 hours before any non-essential purchase)
Unsubscribe from promotional emails
Avoid stores or websites that trigger spending
Build a small emergency fund ($500-$1,000) to prevent new debt from emergencies

What to Do When You Feel Discouraged

Debt payoff is a marathon, not a sprint. There will be hard days. Here’s how to handle them:

When progress feels too slow:

Look back at your starting point, not just forward to the end
Celebrate small wins (every $100 paid off matters)
Calculate how much interest you’ve saved
Remember that slow progress is still progress

When you have a setback:

One mistake doesn’t erase all your progress
Get back on track immediately (don’t let one bad week become a bad month)
Adjust your plan if needed (it’s not failure, it’s flexibility)

When you feel overwhelmed:

Focus only on this month’s goal, not the entire journey
Break it down: just focus on this week, or even just today
Reach out for support (financial counselor, accountability partner, online community)

When you want to give up:

Revisit your homeownership intention from Day 1
Remember why you started
Look at the progress you’ve already made
Imagine your future self thanking you for not giving up

Your Day 4 Action Checklist

Before you close out today, complete these essential steps:

✓ Created complete debt inventory with all information filled in

✓ Calculated total debt across all categories

✓ Calculated total monthly payments and DTI ratio

✓ Chose a debt payoff strategy that fits your personality

✓ Identified your first target debt to attack

✓ Calculated how much extra you can put toward debt each month

✓ Set up automatic minimum payments on all debts

✓ Scheduled your first extra payment within the next 7 days

✓ Created your 30-day, 90-day, and 6-month goals

✓ Put your debt payoff plan in your financial command center

Moving Forward

You did something today that takes real courage. You looked at every debt, added up the total, and faced the full reality of where you stand.

Most people never do this. They avoid it, minimize it, or live in denial. But not you.

You faced it. You documented it. You created a plan.

That’s the difference between people who stay stuck in debt and people who eventually break free. That’s the difference between people who dream about homeownership and people who actually achieve it.

Your debt doesn’t define you. But your decision to face it, to create a plan, and to take action? That defines you as someone who’s committed to building a better future.

Tomorrow, we’re building your realistic budget, one that accounts for real life while still moving you toward your goals.

But today, acknowledge what you accomplished. You stared down something scary, and you’re still standing.

That’s strength. That’s growth. That’s progress.

👉 Join our Facebook community: Dream It Affirm It Own It
This is where we share wins, ask questions, stay accountable, and grow together.

How did today feel for you? Was your total debt more or less than you expected? What strategy are you choosing? Share in the comments—your journey might inspire someone else to take this step.

FTC Disclaimer: This is not a sponsored video or article. All opinions are genuinely my own. This post also contains affiliate links and I earn a small commission if you make a purchase after clicking on my links. It does not cost you any extra. Thank you for your continued support to keep the Bri Callis Blog going!