Thursday, September 13, 2012, AM | 1 Comment
Debt is humongous problems for many folks. Sometimes they just can’t afford to pay more than the minimum. The debt, thus, keeps piling up month after month.
Personal debt can become a nightmare. There is huge cost to it not only financial but emotional as well. Therefore, the sooner you face the problem, the sooner you can get back in the black – with savings in the bank.
Understand your income, spending, and debt
According to government Bureau of Economic Analysis, the average American personal saving was 4.2 percent in July 2012, down from 4.3 percent in June.
Make an honest effort and put at least that much of your income away as saving. And then pay for your expenses.
Experts say it’s often small expenses such as eating out, your morning coffee that make the difference for people on the edge. Spending $10 a day on lunch can add up to more than $400 a month for a household if two people are eating out.
If you are living paycheck to paycheck, it’s enough to push you over a financial cliff. See what you can cut in your expenses.
Manage your debt the right way
If you can’t deal with debt just by tightening your belt, do the following:
Get credit counseling ASAP
Nonprofit debt management companies are popular options for creating a plan to repay debts and halt harassment from creditors.
There are reputable non-profit companies such as Money Management International, a Houston-based firm that’s the nation’s largest nonprofit counseling service.
Other reputable counselors can be found through the National Foundation for Credit Counseling (NFCC) and the Association of Independent Consumer Credit Counseling Agencies (AICCCA).
Debt settlement companies
They are an option, but take extra precaution when you talk to them. Debt settlement companies are a controversial tool for deeply troubled borrowers, especially those with hefty credit card debt. These for-profit firms agree, for often hefty fees, to try to negotiate a lower debt balance with your creditors.
Home equity loans
It’s hard to do these days. Taking a loan out against the value of your home was a popular option during the housing boom. But using home equity to pay off credit cards, for example, isn’t the safest way back to fiscal health.
Talk to creditors
Before you go to someone else to help manage your debt, remember that there are steps you can take by yourself to get control of the situation. The first step is opening up communication with your creditors and then go from there.
Bankruptcy should be your last option
If you are really and wholly drowning in debt, bankruptcy may be the only option. If it’s clear that paying back debt will be almost impossible, the first step is to get some legal help.
No matter what happens, stay cool and stay positive
You must deal with the emotional component that I mentioned earlier in a positive way. Dealing with debt is never easy, and the stress can affect your family, your work, and your mental health. Get emotional help from family, friends, your pastor.
In a Nutshell
It’s best to keep financial strain as separate as possible from the rest of your life.
People ought to realize they need to separate their net worth from their self worth. People don’t realize they have options, and stress because of their debt is really ruining their lives.Facebook.com/doable.finance