I’ve had a few folks in my office recently discussing their budgets and one of the common problems is debt, being overwhelmed about it, not knowing how to tackle it. Here are some tips if you are facing a similar thing.
Understand the situation – There is no need for fancy software or mad technical skills to grab hold of your money situation. All you need is a pad, a pen and the bills. Write the lender’s name, the balance due and keep a list of minimum payments. If because of divorce of other transitions you aren’t sure if you are receiving all your bills- and you want to FULLY understand your debt situation – get a copy of your credit report, for free, at www.AnnualCreditReport.com
Make calls – Things aren’t going to accidentally get better by inaction. The only way to take control and face your debt problems is with action. And in this case, that means phone calls. You need to call each lender and discuss terms to get back on track if you behind on repayment. You owe these people. You signed paperwork to pay them. You have not paid them. I’m sure there are good reasons for that, but you now need to see if there is a way to right this. Ask. Explain. Be mature and frank. Be polite. The person on the phone is working to pay their bills and is not out to get you. So be polite.
And a plan – Now that you have a handle on your debt condition, you will need to rearrange your spending so a repayment plan can be reliably met. You’ll need to have a careful handle on your budget for food and other variable expenses. Variable expenses are the money spent that is not the same every month, such as food, entertainment, clothing expense, etc. You need food, but you don’t need to eat out. You need clothing, but you can find that at Goodwill and shop significantly less often. You need to relax, but that doesn’t mean going to the movies every week followed by bowling and other activities that cost money now needed for debt repayment.
Don’t make things worse- Whatever you do, don’t add to the problem in despair or immaturity. This is not the time for feeling sorry for yourself or acting as if you deserve a better lifestyle. You will HAVE a better lifestyle when the debts are paid off.
Celebrate – And speaking of a better life, every bit of progress you make is cause to celebrate. You are being responsible and digging yourself out of trouble. You have reason to be happy. So make sure you cheer for your good effort because this is awesome!
Understand the situation- http://www.moneymanagement.org/Budgeting-Tools/Credit-Articles/Money-and-Budgeting/How-To-Personal-Debt-Find-Out-Who-and-How-Much-You-Owe.aspx
Debt collection- http://www.wiserwomen.org/index.php?id=543&page=Debt_Collection:_What_You_Need_to_Know
All debts not equal- http://www.nolo.com/legal-encyclopedia/trouble-paying-bills-debts-tips-32215.html
Marion Syversen, MBA
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