Wednesday, June 27, 2012, AM | 2 Comments
You’ve heard enough about the European debt crisis. It’s hard to get too miserable over something happening thousands of miles away — especially when you’ve got your own personal debt crisis right here at home, staring you in the face, and starting to make your life a roller coaster of worry and self-recrimination.
Well, there’s not much you can do about Europe, anyway, but you don’t have to allow your own debt crisis to get the better of you. And it doesn’t matter how you got there — unemployment, a medical or family emergency, overspending — things just happen in life that can put you in over your head.
But many before you who have fallen, or dug themselves, into debt have also managed to climb their way out by applying certain time-tested strategies. Here are five proven steps to take on your ascent out of debt and back up into the world of fiscal and emotional stability:
Now is the time to ratchet down any anxiety, blame or anger and think rationally. Do the math: Assess your finances down to the last dime – savings and checking accounts, retirement plan, insurance policies, home value, income – so you know how much you owe in short- and long-term debt, and then separate your secured obligations (home, car) from those that are unsecured (credit card).
Keep the Lights On
Your secured debts need to be your highest priority, i.e. your mortgage and your car loan. Also, rent and utilities need to be paid. It’s not a lot of fun, but you have to contact these lenders and payees and explain your situation. Creditors are usually more understanding if you can show them that you’re attempting to pay your bills, but need some extra time or a payment modification.
Have a Plan
Your unsecured debts – like your outstanding and overdue credit card balances – need to be paid down. Here, you may want to consider credit counseling or the help of a debt relief company with experience and expertise in debt settlement and debt consolidation. A realistic debt management plan, carried out with the help of competent professionals, can help you reduce the amount of your debt and/or arrange for lower interest rates and a waiving of late fees and penalties.
Change Your Spending Habits
Even if your debt crisis was not your fault, you’re still going to have to cut expenses. That may mean overhauling your shopping habits, postponing some purchases and cutting back on all non-essentials. It probably also means more dinners at home. It’s a good idea to put the credit cards away for a while, too. The worst thing you can do is run up more debt when trying to pay down the ones you already have.
Stick to It
Getting out of debt requires a major commitment to changing the behaviors that may have gotten you there – like overspending and not paying enough attention to your finances. But once you begin to see that you can repair and rebuild your economic condition, certainty will begin to replace worry and the future will appear more hopeful – even with what’s going on in Europe.
BIO: Jeffrey Sterner writes about personal issues for Debt.org.
- Jun 28, 2012: User:GroomVanvalkenburg446 « Debt Consolidation Plan