Debt Accumulation The Crisis Facing Many Americans
Debt Accumulation- The Crisis Facing Many Americans!
In 1929 the United States of America fell into a Great Depression. Scholars have often wondered why or what caused it. Whatever happened was a long time ago. Today we are faced with the same problems our grandparents and great grandparents dealt with. The banks, credit unions, and small time lenders are losing money and are going bankrupt faster than you could shake a stick at. At some point we have to ask why this is happening.
Many thousands of Americans are struggling to pay for their debts. Many have credit card debt that far exceeds appropriate levels. 5,000 to 20,000 dollars worth of debt is no laughing matter, unfortunately some have higher debts. With the job market shutting down for a lot of people it makes solving this common problem a lot more difficult.
Managing your debt will make a 100 percent difference. Believe me when I tell you that I have credit card debt just like everyone else. I am not an expert on financial matters by any means, but I know that what I do works for me. I control how much money I spend per month based on how much I make. In previous years I have been able to pay off every one of my credit cards and loans, so I know that anyone can do it.
The first thing anyone needs to do is assess their financial responsibilities. Then you need to figure out exactly how much money you earn per month. Next, take your unnecessary debts to the chopping block. Finally, pay down those debts that you cannot erase.
What Debt Does To Us.
Assess your Financial Responsibilities.
This step can be easily assessed by taking a look at everything you have spent money on. Figure out whether those expenses are the basics, such as mortgage payment, car note, insurance, food, utilities, and etc. Also figure out which expenses are frivolous or things you want.
These types of money waster’s can go bye-bye within one month. It really sucks but things like cable TV, a house phone or cell phone (you need one or the other not both), movie rentals and other entertainment things, and dining out are all useless wastes of money.
Controlling these purchases and luxuries will add a lot of extra money to your bank account very quickly. I spend roughly two hundred dollars or more per month on useless crap like the above examples, but only if I have the money to do these things. However, if you’re reading this it is likely that you are strapped for cash. A simple thing to do to even cut down on food is to buy items that are cheaper like store brand veggies and avoiding name brand stuff like the plague.
There are thousands of tips all around the internet on how to save money on necessary expenses. If I listed them all here this would be more of a report than an article. One more tip. Energy wasted is a huge expense that once more is useless. Why pay for 300 KW of power when you only use 150 KW. Shut off the lights, set the thermostat to a comfortable 70 degrees and leave it alone, wash your clothes in cold water, and many more. You could spend $45.00 on energy efficient fluorescent light bulbs to save 50 bucks per month for five years. That right there ladies and gentlemen just saved you $3000.00 for a one time purchase of $45.00. That is a great return on your investment.
Figure out exactly how much money you’re making per month.
When you sit down to figure out what you are spending take a few more minutes to figure out what you’re making. You may have to scroll down the page for awhile but sooner than later you’ll come across the deposits made. Every deposit could be added together, but I recommend only adding up the main deposits from your job. If you have been recently laid off, you’re unemployment checks will help you pay for only a few things. I am sorry but finding a new job should then become of the utmost importance. However, I am sure you already know this.
Once you have a good solid number for your income, subtract your debts from your credit. If you are still in the green you’re good to go on with the program. If you’re in the red, you’ll have to cut out more items than your counterparts.
Take your debts to the Chopping Block
Start canceling the bills that you assessed as unnecessary or useless. These are the ones that you can cancel. Talking to your creditors will have a huge impact on their cooperation and sometimes threatening them with “lawyer interaction” is very helpful. I recommend going the friendly way first and foremost though. However, there is occasion when creditors are **expletive** and need to be strong armed.
Credit Cards cannot be eliminated without paying off the balance first. You can however, shut them off or shred them. If you have more than one credit card you need to do it with all but one. Choose a credit card that has a high limit, low balance, and low interest rate for your keeper. This “keeper” credit card will be for emergencies only!!
Canceling bills that are not necessary and eliminating those frivolous luxuries will make the biggest difference.
Start paying down your debts
Most times in financial crunches we are faced with more debt than income. We all realize this but few can figure out how to get rid of the astronomical amounts we have to pay. If your bills are more than you can handle after cutting out all the BS bills then here are some tips.
One, consolidate your credit card bills and smaller bills with a personal loan. This is probably the best way to combine several payments into one bill. To read more on personal loans click here.
You could do a debt consolidation course and have a professional help you with it. This is a great tool but it will take longer for you to eliminate all your debt. Besides you want to have access to credit in case of emergencies.
Make more money. This is a lot easier said than done. You may already be making more money so you can get out of debt. This may not be an option, but then again maybe it is. It’s your choice on this matter.
Next let’s move on to the bread of this article. Each month you’ll pay your bills like normal paying exactly the minimum amount necessary to avoid late fees. At the end of the month you’ll have X amount of dollars left over. With this amount, choose a debt that can be eliminated and put the whole amount towards that balance. Keep doing this until one is paid off. The month after that, the minimum you paid for that one can be added to X amount. Keep doing this until all your bills are demolished. Each time you pay off a bill, the minimum can be added to the remaining amount.
The most important thing to consider is that you made a mistake. We all do this, but we have to learn from it. After all your bills are paid off you could start taking ten to twenty percent of your take home pay and put it into a savings account.
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