We've all heard the simple, common sense suggestions that financial advisors put out there everyday to provide tips on becoming debt-free. Don't get me wrong; I'm not suggesting that these typical everyday tips don't work. They most certainly do. However, in addition to these redundant tips (which will be found in this article in abundance), there are other ideas that are not always visited by the so-called "pros."
Unfortunately, many of the financial gurus we count on for advice don't understand that some people are beyond the average consumer's debt problems. Luckily for you, I will address the needs of the average consumer, as well as those of individuals who are in way over their head, and don't see any light at the end of the tunnel.
Stop Using Credit Cards and Start Budgeting
Whatever it takes. If you need to cut up your credit cards, do it. I do, however, suggest keeping one card available (tucked away in a drawer, and not carried with you at a high-temptation store) for emergency purposes only. But, stop using credit cards to live. Instead, set a budget for yourself, using your available cash only. If this is impossible, stay tuned; there will be additional advice forthcoming. If this goal is attainable, though, consider the following:
Housing expense should not exceed 35% of your net monthly income.
Debt, including credit cards, medical bills and student loans should not exceed 15% of your net monthly income.
Entertainment, clothing, groceries and all that goes along with living should not exceed more than 25% of your net monthly income.
Transportation expenses, including auto loans, gas and auto insurance, should not exceed 15% of your net monthly income.
And finally, savings. This is your key to at least some level of comfort. Try, try, try to save at least 10% of your net monthly income.
Again, please know that I understand this budget may not work for everyone. If you fall into a category where you're too far in debt, you will need to look at more extreme measures, which will be visited later in this article.
Work With Your Creditors to Reduce Interest Rates
If your interest rates are 20%-30% it is absolutely necessary to call your creditors to negotiate reduced interest rates. I'm a realist, and I know that not all creditors will agree to do so; however, it's worth the phone call. If your creditors refuse to work with you it might force you to look into more extreme measures. You might want to mention this to whomever it is you're negotiating.
Increase Your Monthly Cash Flow
If you have things lying around your house, which you doubt you'll ever use again, perhaps your trash can become someone else's treasure. Consider eBay or Craigslist. If this isn't an option, perhaps you can look at the possibility of taking on a part time job.
Prioritize
Okay, admittedly, this is one of those "simple minded" tips, but it is indeed valid. If you have credit card debt and/or medical debt, it may be time to make some changes and re-prioritize your lifestyle. Cut corners wherever you can. Pack those lunches, clean your own house, consider cutting out movies and dinner. Also, these days a lot of people are spending money on extracurricular activities for their kids. While I completely understand this (I'm a mother, after all), is there a program that might be a little less expensive for your child? I have personally paid for private lessons for my kids when I couldn't afford it. Looking back, it was a mistake.
Chip Away at Your Debt
You should always be paying more than the minimum payments on your credit card accounts if you can. But, if you find yourself in a position where you have an extra paycheck or a little overtime, take that money and put it toward your debt. Putting this extra money toward the highest interest cards will help you to effectively eliminate your debt.
Don't Freak Out
While debt can be quite burdensome, don't let it consume your every thought. No matter what amount of debt you have, and what your income is, there is a solution for you. If the standard traditional budgeting won't work for you, there are alternatives, which will be discussed shortly.
Get Organized
Being organized and knowing where to find everything you need will give you a feeling of control. Whether you use a file cabinet or a collapsable file folder, be sure to place your statements and other important documents where you're sure to find them. Label each file folder and place these documents in alphabetic order. I know it sounds silly, but feeling as though you have some control does empower you.
Be Open to the Idea of Eliminating Toys
I know it sounds unpleasant, but if eliminating a jet ski, snowmobile, boat, camper, jewelry or extra car can provide you peace of mind, do it. There is plenty of time to make these purchases later in life, when you're in a better place financially.
Take a Look at all of Your Options
As I stated previously, traditional budgeting may not work for everyone. If you're too far in debt and don't see yourself ever eliminating your debt, it might be time to consider other alternatives, such as consumer credit counseling, credit card debt settlement and, finally (ouch!), bankruptcy.
Consumer credit counseling is a program whereby you will sign up with a firm, which will negotiate reduced interest payments on your behalf. You will then send one payment to this agency, and they will distribute the re-negotiated payments to your creditors. Typically, this type of program takes approximately five years to complete. Obviously, this doesn't work for everyone, because oftentimes the reduced interest and payments don't do enough to relieve consumers of their financial hardship. This is, however, an option worth looking into.
Credit card debt settlement is a program designed for consumers and small businesses who simply can't crawl their way out of debt. This type of program is one where your creditors will accept reduced payoff amounts on your credit card balances. For instance, if you owe $10,000 to a creditor, an experienced negotiator may very well get this creditor to accept $3,000-$5,000 as settlement in full. Of course, this program is not painless (none of them are), but it can save you thousands, and even tens of thousands of dollars, and eliminate your debt in as little as eight months, depending on your personal situation.
And finally, the dreaded bankruptcy. Yes, this is a scary thought, but if none of the above options is a good fit for you, unfortunately, you may simply not have a choice. I suggest that you look into the aforementioned options. If they simply won't work for you, contact three different bankruptcy attorneys in your area, who are willing to offer a free consultation, and determine if bankruptcy is your best route.
Breathe
Yes, take a deep breath. Don't panic. One way or another, you will get out of debt. Reach out for assistance from a professional. While there are many people not to be trusted, there are as many, of not more, who are here to help and will certainly point you in the right direction. I wish you the very best to resolve your outstanding debt.
Marie Megge is a consultant in the credit services industry. Over the past several years she has assisted hundreds of individuals, families and small businesses in resolving their debt-related matters. For more information regarding credit and debt settlement visit http://www.donaldsonwilliams.com
Article Source: http://EzineArticles.com/?expert=Marie_Megge
Article Source: http://EzineArticles.com/8236718
Unfortunately, many of the financial gurus we count on for advice don't understand that some people are beyond the average consumer's debt problems. Luckily for you, I will address the needs of the average consumer, as well as those of individuals who are in way over their head, and don't see any light at the end of the tunnel.
Stop Using Credit Cards and Start Budgeting
Whatever it takes. If you need to cut up your credit cards, do it. I do, however, suggest keeping one card available (tucked away in a drawer, and not carried with you at a high-temptation store) for emergency purposes only. But, stop using credit cards to live. Instead, set a budget for yourself, using your available cash only. If this is impossible, stay tuned; there will be additional advice forthcoming. If this goal is attainable, though, consider the following:
Housing expense should not exceed 35% of your net monthly income.
Debt, including credit cards, medical bills and student loans should not exceed 15% of your net monthly income.
Entertainment, clothing, groceries and all that goes along with living should not exceed more than 25% of your net monthly income.
Transportation expenses, including auto loans, gas and auto insurance, should not exceed 15% of your net monthly income.
And finally, savings. This is your key to at least some level of comfort. Try, try, try to save at least 10% of your net monthly income.
Again, please know that I understand this budget may not work for everyone. If you fall into a category where you're too far in debt, you will need to look at more extreme measures, which will be visited later in this article.
Work With Your Creditors to Reduce Interest Rates
If your interest rates are 20%-30% it is absolutely necessary to call your creditors to negotiate reduced interest rates. I'm a realist, and I know that not all creditors will agree to do so; however, it's worth the phone call. If your creditors refuse to work with you it might force you to look into more extreme measures. You might want to mention this to whomever it is you're negotiating.
Increase Your Monthly Cash Flow
If you have things lying around your house, which you doubt you'll ever use again, perhaps your trash can become someone else's treasure. Consider eBay or Craigslist. If this isn't an option, perhaps you can look at the possibility of taking on a part time job.
Prioritize
Okay, admittedly, this is one of those "simple minded" tips, but it is indeed valid. If you have credit card debt and/or medical debt, it may be time to make some changes and re-prioritize your lifestyle. Cut corners wherever you can. Pack those lunches, clean your own house, consider cutting out movies and dinner. Also, these days a lot of people are spending money on extracurricular activities for their kids. While I completely understand this (I'm a mother, after all), is there a program that might be a little less expensive for your child? I have personally paid for private lessons for my kids when I couldn't afford it. Looking back, it was a mistake.
Chip Away at Your Debt
You should always be paying more than the minimum payments on your credit card accounts if you can. But, if you find yourself in a position where you have an extra paycheck or a little overtime, take that money and put it toward your debt. Putting this extra money toward the highest interest cards will help you to effectively eliminate your debt.
Don't Freak Out
While debt can be quite burdensome, don't let it consume your every thought. No matter what amount of debt you have, and what your income is, there is a solution for you. If the standard traditional budgeting won't work for you, there are alternatives, which will be discussed shortly.
Get Organized
Being organized and knowing where to find everything you need will give you a feeling of control. Whether you use a file cabinet or a collapsable file folder, be sure to place your statements and other important documents where you're sure to find them. Label each file folder and place these documents in alphabetic order. I know it sounds silly, but feeling as though you have some control does empower you.
Be Open to the Idea of Eliminating Toys
I know it sounds unpleasant, but if eliminating a jet ski, snowmobile, boat, camper, jewelry or extra car can provide you peace of mind, do it. There is plenty of time to make these purchases later in life, when you're in a better place financially.
Take a Look at all of Your Options
As I stated previously, traditional budgeting may not work for everyone. If you're too far in debt and don't see yourself ever eliminating your debt, it might be time to consider other alternatives, such as consumer credit counseling, credit card debt settlement and, finally (ouch!), bankruptcy.
Consumer credit counseling is a program whereby you will sign up with a firm, which will negotiate reduced interest payments on your behalf. You will then send one payment to this agency, and they will distribute the re-negotiated payments to your creditors. Typically, this type of program takes approximately five years to complete. Obviously, this doesn't work for everyone, because oftentimes the reduced interest and payments don't do enough to relieve consumers of their financial hardship. This is, however, an option worth looking into.
Credit card debt settlement is a program designed for consumers and small businesses who simply can't crawl their way out of debt. This type of program is one where your creditors will accept reduced payoff amounts on your credit card balances. For instance, if you owe $10,000 to a creditor, an experienced negotiator may very well get this creditor to accept $3,000-$5,000 as settlement in full. Of course, this program is not painless (none of them are), but it can save you thousands, and even tens of thousands of dollars, and eliminate your debt in as little as eight months, depending on your personal situation.
And finally, the dreaded bankruptcy. Yes, this is a scary thought, but if none of the above options is a good fit for you, unfortunately, you may simply not have a choice. I suggest that you look into the aforementioned options. If they simply won't work for you, contact three different bankruptcy attorneys in your area, who are willing to offer a free consultation, and determine if bankruptcy is your best route.
Breathe
Yes, take a deep breath. Don't panic. One way or another, you will get out of debt. Reach out for assistance from a professional. While there are many people not to be trusted, there are as many, of not more, who are here to help and will certainly point you in the right direction. I wish you the very best to resolve your outstanding debt.
Marie Megge is a consultant in the credit services industry. Over the past several years she has assisted hundreds of individuals, families and small businesses in resolving their debt-related matters. For more information regarding credit and debt settlement visit http://www.donaldsonwilliams.com
Article Source: http://EzineArticles.com/?expert=Marie_Megge
Article Source: http://EzineArticles.com/8236718
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