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Debt Advice
We should recognize the good things debt does for us such as allow us to borrow money to buy a home or an automobile. Most of us would be hard pressed to become homeowners if we had to save the full purchase price of our homes. It would be too difficult to accumulate the necessary money while paying rent for the housing we need. As with this example, if we incur debt that is manageable, often times it is a valuable consumer tool.
When it becomes unmanageable, that is when debt ruins lives. Anyone can find themselves in this predicament and so long as the lessons are learned on how you got there and they are not repeated, it is time to erase that debt and secure your financial freedom (link this article).
The first step is a hard one- get rid of the credit cards. This is going to affect your life but imagine being debt free, isn’t it worth some changes? Keep one that you use sparingly and has reasonable terms but get rid of the rest. You’ll just use them and accrue more debt.
Next, form a plan to pay down the debt with the highest interest rate first and from there move down the list of who you owe knocking off the highest rates to the lowest. Interest charges and fees are the gas that gets thrown on the debt fire so by strategically targeting and eliminating the highest interest rates first, you are getting the most for your hard earned money and changing the movement of your financial tide.
Also, negotiating fairly with creditors can be extremely useful. If you’ve missed a mortgage payment some lenders will tack the missed money on the end of the loan rather than continue to charge fees for a missed payment. If you have a decent standing with your credit card companies they can be amenable to waiving a late fee every so often. You can’t count on this but it can happen if you ask and that means more money in hand to pay down your debt.
Don’t ignore the psychological aspects of this. Some of these changes will be tough but do you know who has debt? Adults, so let’s not be childish about it. Taking control of your finances is incredibly empowering. It’s what grown-ups do to get what they want from life. So while it may be tough to make changes, ultimately they will be powerfully positive changes. You deserve to treat yourself with this respect.
Sometimes it is just too much though. If you’ve looked at the money you have coming in versus the money that needs to go out and you find yourself in the negative then it may be time to consider debt counseling, debt consolidation or even bankruptcy. Make sure you first exhaust your own efforts in trying to resolve the debt issues you face before turning to a business that will charge you (consolidators or attorneys) for the work. But facing up to the debt issue is the only way to make it go away.
Topics: Debt Consolidation |
