Not having the money you need to meet monthly financial obligations can be overwhelming at times. You may feel stressed, hopeless and not know where to turn for help.
While debt can be a burden, it’s important to keep in mind you are not alone – everyone incurs some sort of debt. According to the Federal Reserve, U.S. consumer debt exceeded $2.45 trillion with an average credit card debt per household totally more than $16,000 in 2010.
While the debt you have incurred may seem daunting, how you manage your debt is completely in your hands. Securing the help you need to protect your future will lead you down the path toward debt recovery.
First, you need to analyze your personal financial situation. List money you owe and determine how you are spending it. When you understand where the money is going, you can better control it.
Next you need to calculate your living expenses, such as food, incidentals and transportation costs, such as gas or bus fare. Don’t forget other monthly obligations such as mortgage or rent, insurance costs, education and loan and credit card payments. Once you determine your net monthly income, subtract your expenses along with your monthly obligations. Your result may be shocking – but knowing this number is essential to your path to debt recovery.
Once you have a clear picture of your financial situation, you need to find a way to reduce your debt load through refinancing, consolidation and/or renegotiating payment terms through a debt settlement.
If you own a home, perhaps you can refinance your mortgage to a lower rate in order to reduce your monthly payment. You also may be able to refinance your car or student loan to lessen obligations.
Another option is to consolidate your debt if you have equity in your home. A Debt Consolidation Home Equity Loan or Line of Credit (HELOC) allows you to roll your unsecured, high-interest debt into a secured loan.
If you don’t have equity, you may be able to lower your payment by renegotiating your terms, such as your fixed or variable rate, with your credit card company.
With the money you save on a monthly basis, you can move forward and pay down additional debt and work toward creating a savings account. It’s important to try to build a solid emergency fund so you won’t have to reach for your credit card when faced when an unexpected expense in the future.
Another option involves debt settlement, which can take several years to complete. Debt settlement involves negotiating with creditors to reduce the amount of money you owe using a debt resolution company. It’s important to choose a company that is a member of the International Association of Professional Debt Arbitrators (IAPDA) as they require a high level of training. To ensure fair business procedures, the company should also be a member of the Better Business Bureau (BBB).
Another alternative, considered a last resort, is to declare bankruptcy. While this option may eliminate most or all of your debt, your bankruptcy status will have long-lasting repercussions. Not only will the filing remain on your credit report for 10 years, you will be prevented from obtaining new lines of credit and have trouble finding a job.
Part of your path toward debt recovery should include seeking financial advice for the future. Contact a reputable debt counseling agency to help you manage your finances efficiently. Many of these services are available through the Internet and by telephone. There are also many non-profit counseling services available at credit unions, branches of the U.S. Cooperative Extension Service universities and military bases.
Provided by Debt.org – America’s Debt Help Organization.
Related articles
{ 0 comments }
