Copyright © 2004 Drew Harris
Pay-Off-Debt-Now.com
http://tinyurl.com/4bbum
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of dollars worth of equity has been withdrawn from millions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.
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.
