Monday, August 17, 2015, AM | 2 Comments
These days a number of individuals and especially families are facing to pay debt that they have accrued over the years. Even tough the unemployment is easing up on many families, it is still hard to pay off debt and thereby to put food on the table.
Debt is a toxin the effect of which must be eliminated or least bring it to a manageable level.
Up until the recession started, credit was so easy that anyone could get thousands of dollars, especially on credit cards. With the free spending nature of the society – government and American public – nobody was able to see the coming crashing down of the U.S. economy.
Savings of typical individuals and families I kept hearing since I migrated to the U.S. 35 plus years ago, have always been less than 4%. In some Asian countries, it has been more than 15% on the average.
When I first moved here to the States, I read in an article that America was built on spending. Some economists say that spending is good for the economy. It may be OK when a country has unlimited and I mean literally unlimited resources of any kind. But no individual, no family, no government, no nation has that kind of resources.
There is a saying in some societies that you stretch your legs according to the length of your sheet, otherwise you would get cold feet. In other words, live within your means. We, as a nation must curb spending. Everybody must do that – the government, individuals and families – especially when we were depending so much on jobs, on our retirement account and our savings if there was any left.
In the future
- Start thinking about saving.
- Stop thinking about free spending.
- Live within your means. Buy what you can afford.
- Rethink spending habits and return to the basics of building a strong foundation in personal finances.
But this is good and dandy for the future. What do we do now? We piled up a large debt – credit card, mortgage, no job, lesser and a lot lesser retirement account. I have compiled a brief general opinion about the situation, regardless of how we got here in our personal spending habits and exuberant debt.
Before you do anything drastic
If you are not satisfied with your mortgage lender, contact the Office of the Comptroller of the Currency (OCC) which is a bureau of the United States Department of the Treasury. The OCC charters, regulates, and supervises more than 1,600 national banks to ensure a safe, sound and competitive national banking system that supports the citizens, communities and economy of the United States.
If one spouse or perhaps both were free spenders and even today there is no end in sight of free spending by some people, see a marriage counselor.
Now if one spouse is spending and the other does not know about it, then seeing a marriage counselor may be the best thing to do. It will not only save your marriage but it will also help you curb your free spending.
Surveys after surveys tell us an increasing number of marriages are going through that because of money problems. May be it is an old saying but I heard it recently. A number of people are cheating on their spouses in terms of money spending. It is called financial infidelity.
You need to make a call to a legitimate credit counselor affiliated with the National Foundation for Credit Counseling ( www.nfcc.org).
NFCC can help you guide through the maze of getting rid of debt. Go over the website. When you read news in its newsroom, you would be surprised how many are in that situation.
The credit counselor can discuss your options for repaying the credit card companies at lowered interest rates. In cases where consumer debt is more than a family income – and there are numerous families – it is extremely hard to pay off the debt. Money going out is more than money coming in, obviously that is a huge problem.
The credit counselor should be able to help families especially when their income is more than the debt that they have accrued. It is still hard but they have to prioritize their buying needs over their wants and wishes.
The bankruptcy attorney can advise you about what you might face if you decide to file. You might be able to file for Chapter 7, which would erase most of your unsecured debts, including the credit cards. If not, you could file a Chapter 13 repayment plan that might require you to make payments for five years. Once you complete the plan, your remaining credit card debt would be erased.
In a Nutshell
Granted bankruptcy is the last resort you can take, but try to avoid at as much as you can. It’s not something to be proud of, but it is not something to be so shameful about either. Those days of shame are gone.
- Apr 3, 2011: Sunday Round-Up for April 3, 2011 | MomVesting