In our world of dizzying change, nothing is more
true than the time honored statement that circumstances always
change. No where is this more true than with financial issues.
Have you ever borrowed money, or charged up the
VISA card at Christmas, all the while telling yourself that you
would pay everything off with a coming tax refund or bonus? Sound
familiar. And then what happens when the bonus money arrives?
Let me guess….circumstances changed, the
car needed brakes (or the kids needed braces, etc), and the VISA
debt and interest charges keeps piling up.
Unless you have a plan, you will always be caught
in the unpredictable grip of “changing circumstances.”
This is a slippery slope that can very quickly
become serious financial stress. Consider the fact that Americans
are declaring bankruptcy at record rates. One in every 100 families
is affected by a bankruptcy.
I was on this slope 10 years ago. Declaring personal
bankruptcy and filing for divorce went hand in hand.
One of the most insightful moments of the process
was preparing a written log for the trustee of all of our spending
for the 5 years leading up to bankruptcy.
While all of the individual decisions made sense
in the moments that they were made, they looked totally foolish
in the context of the “bigger picture”
In other words, constantly changing circumstances
drove us off our financial roadmap.
Consider this five step plan for getting on,
and staying with, your financial roadmap.
Step No. 1: Make a list of what
you owe & prioritize: Put all your bills in a pile. Then list
your debts in order, starting with the largest balance first.
Then prioritize your repayments (ie paying down the highest interest
rate first).
Step No. 2: Eliminate credit
cards and don’t roll over balances. Once paid off, notify
the company that you want to close the account.
Step No. 3: Make a spending
plan. Change your free-spending ways. Track the money that’s
coming in and going out. Use a debit card instead of your credit
card. Download your bank transactions into a computer program
for easy categorizing.
Step No. 4: Be careful about
the equity in your home. Billions of dollars worth of equity has
been withdrawn from millions of homes in the last few years. But
many people pay down credit cards only to charge them up again
– and then you don’t have the safety net of the equity
in your home.
Step No. 5: Get help. For some
people, the problem of overspending is a psychological one. Spending
can become a habit that’s as difficult to kick as alcohol,
drugs or gambling. Sometimes, it’s due to circumstances
they truly could not avoid: medical bills or divorce or loss of
a job.
You can talk with a credit counselor on a private
basis. It only appears on your credit report if you enter their
debt repayment program.
During this holiday season, as you consider your
finances, remember that Americans are now carrying $683 billion
in revolving credit card debt. 47% of the people who paid less
than the full amount on their credit card bills in a recent month,
made only the minimum payment due.
The good news is that planning and professional
help will definitely help you turn things around.
Case in point: I went from bankrupt with zero
assets living in a boarding house, to gainfully employed, running
my own home based business, with 2 houses and excellent re-established
credit.
In other words, it can be done.
Pay-off-debt-now.com is run by Drew Harris and is a one-stop-shop
web portal for those facing crushing debt issues. Multiple pages
of resources, referrals and tools. Expert advice on credit cards,
loans and avoiding bankruptcy. http://tinyurl.com/4bbum
