No matter how hard we try, sometimes we find ourselves in serious financial trouble because of our debts. This happens often to young people who dont understand the concept of buying only what they need or who dont take consider any possibility of a change in income that may affect
their ability to pay their bills.
It can be something as simple as an increase in rent, electric, car insurance, or gasoline that can put you over the edge financially if you are already on the borderline.
What kind of help is available when you find that your debts are beginning to be unmanageable?
One of the first things you should do when you find out that your debts are beginning to create havoc with your budget is to cancel your credit cards at the very least, remove them from your wallet or purse and do not use them any more until you get your finances back in control.
If you recognize the signs early enough, you will be able to make some concessions and get yourself back on the right track. It may mean staying home a little more for awhile, taking your lunch to work, eating breakfast and dinner at home, and learning to grocery shop on a budget.
On the other hand, if you dont realize in enough time that your debts are out of control, you may be forced to obtain debt relief from a debt management company.
Depending on the company, they may require that you cut up your credit cards and cancel them during the course of the program.
On the positive side, they can negotiate for a lower interest rate, some eliminate your interest rate completely, allowing you to pay off the balance in a much shorter period that you would have been able to do otherwise.
Do be careful with this type of an arrangement because if the company you choose decides to work out a settlement with the creditor without your knowledge, you will find that it has the same effect on your credit score as a bankruptcy.
You can usually preserve your credit if youre making payments unless you fell behind before the agreement was initiated. In addition, since there is a reduction in the original interest rate, that will automatically make the minimum payments lower on credit cards.
If you have other debts as well, you will need to make some inquiries, because not all debt management companies handle secured debt or debt other than that of credit cards
July 12th, 2007
Most Americans owe several thousand dollars of unsecured debt. The source of this debt problem comes from people constantly overspending their budget. They soon find themselves living paycheck to paycheck with foreclosure and vehicle repossessions only a couple of paychecks away, if that far. Debt problems create tension in the home, family stress, and can lead to divorce if not addressed.
The only surefire way to eliminate debt involves changing how you think about money and spending. You must adopt the mentality of a Navy Seal on a top-secret mission to succeed. Finance companies make millions of dollars from middle class Americans, and profit from those who can afford it least for years now. The madness must stop.
To eliminate debt, take a hard close look at your finances. Include the candy bar at the corner gas station. Add up everything you spend money on and label them by their importance to you and your family.
Then take your bills. You know how much you spend for power, phones, entertainment, Friday night pizza. See how much money you can save by trimming these costs. Eliminating debt requires some sacrifices. Navy Seal, remember?
Save on gasoline costs by eliminating extra trips to the store. Turn off the cable/dish service. You need that monthly fee to pay on your debts. Keep your power bill and water bill in check. Use only the minimum you need to live. Think Navy Seal. If you add these savings up, you could find an extra 50-200 a month you just added to your income. This additional income will become your vehicle to eliminate debt.
Now take the smallest debt you owe. How long have you paid on it? Probably way too long and the finance company thanks you for being such a good customer! You have found your first casualty in your eliminate debt quest.
Take the extra income you found and apply all of it to the first bill. Do this until the first bill shows a zero balance. Do not deviate from your course. Do not give up. Be tenacious in your quest.
Once this bill no longer exists, sit back for a moment and revel in your victory. Accomplishing part of your goal requires a celebration to acknowledge the fact. Enjoy the magic words “Paid In Full”. Give yourself a present. Take your family out for a nice dinner. Buy yourself a new outfit! The idea of rewarding yourself only fuels the desire to complete your goal.
Take the money you no longer send to the first bill and start applying it to the second debt, the next victim in line. Do this over and over until you become debt free. This concept works. You can do it.
In order to fully enjoy life, you must learn the life skill of living within your means. The amount of money you will save by not handing it over to the finance companies will surprise you. Family vacations, buying new cars with cash, splurging on new clothes without paying interest on them become goals within your grasp. The struggle between income and expenses becomes nonexistent once you do not owe creditors. You no longer need to work as hard as you did before, it becomes a choice. When your income belongs to only you, you will never need to visit a finance company for a loan or own another credit card during your lifetime. Freedom from debt will give you the best feeling in the world.
July 12th, 2007
