- Personal Finance
Get out of Debt before it's to late
So you're in debt, your stressed out and it seems like you have no option, right? Wrong! Just because you find yourself swimming in your bills it's not the end of the world. So what do you do? How do you manage all that debt? First take a deep breath and try to relax, you need to be focused so you can start on the road to recovery
First of all you must start by evaluating your finances. Make a list, what your income is and your fixed expenditures, you know like housing, food , transportation things that you must pay in order to live and work. Mark down any other financial commitments you have beyond the basic necessities. Then add on your credit card and loan payments. Now that you have visual of what you bring in and what needs to be paid out it's time to make a budget. I know that horrible word budget may have you squerming in your seat, but let's face it because you didn't have a budget or plan to begin with is probably why you got into debt.
So how do you start your budget plan? Well already you've started just by writing down all you financial information. Being able to see everything you owe and what your bring in will help you on your way. Now you need to examine your list, which creditors are owed the most and who is charging the most interest. That interest is a killer and it should be a reminder that when you need a new couch or something you might normally put on a credit card that maybe the interest, the money you'll never get back just isn't worth it. Try saving for what you want or need instead of spending what you don't have, but of course that won't be until after you cleared your debt, right?
Okay so what do you do about those creditors? Well you got yourself into this mess so now you must get out of it. Call all those creditors starting with the one you owe the most or the one charging the most interest. Call them and inform them of your situation ask then to freeze you interest charges then make payment arrangements with them or offer a settlement if you can. Most companies will work with you, after all they want there money back, and they'd rather know your situation sooner then later.
Now that you have made some payment arrangements you need to evaluate and calculate again. List all you income, then deduct all you essential bills. The sum that is left is your surplus but that doesn't mean you've extra money to go and spend, your in debt so you must use any surplus money to pay those bills. If at the end of the day if you don't have surplus money or are exceeding you income it's time to cut back. This is called elimination time, time to eliminate what you don't need. remember things like cable or satellite are luxuries and if you have to give them up for a while do it. If you have the option to car pool with a friend or you significant other do it, or take the bus if it will save you some money. Reduce you energy bills, phone bills even food bills if you can. If your situation is really bad move to a cheaper home or rent out some space with caution of course. There are many ways to cut costs. Look at your situation a decide what is more important a big house with cable and a continuing pile of debt or downsizing and bring your debt down.
You need to budget all your income as best as you can, yes it will take work and sacrifice but it's better then going bankrupt. If you absolutely can't budget your finances or perhaps its just too over whelming speak to a professional. There are plenty of financial consultants out there, start with the ones who already know you, the bank. Most likely they will have someone who can help or suggest a company they often use. Most consultants will give great advice and can help you communicate with creditors if you need them too. Remember your in debt and it is possible to recover from it, and in the end it will be a great life lesson for you, it will teach you limits and give you financial control that of course will give you a more solid future. Know what you have and how much of that you can use and if you can try to save some for the future or for an emergency, don't spend it cause you have it you work hard for your money so stop constantly giving it away on things you don't need and on interest you'll never see again. Be money wise and get out of debt its a decision you won't regret.
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