Getting Tough On Debt
Are you feeling like your debts are overwhelming you
, and you don't even know where to begin to address the problem? Don't leave debt stress to torture you for even one more day. The problem is not going away, and it will only become worse the longer it's ignored. So set about dealing with debt issues right now.
Start by making a list of all your debts. You need to know where you really stand. You need to know exactly how much you owe, and who you owe it to. Don't hide anything, and don't pretend you don't owe something. Once it's all out in front of you, it may feel a bit like taking a rock out of your shoe. A lot of the stress of debt comes from denying it exists-and you've just stared your debt right in the face.
Now prioritize your debts. You likely really want to pay your best friend back, and owing a friend may strain relationships, but it isn't likely going to wreck your credit. So list all your debts in order of the most important ones first. That might include your mortgage and secured loans. That's because you don't want to lose your home, or whatever you've purchased-often it's a car-using the purchase as security against the loan. Then list other debts like credit cards, lines of credit, utilities, taxes and other fines. Things like your electric bill or overdue taxes can often be sorted out more easily than mortgages, so they should be considered low priority.
Now work out exactly how much money you make every month. Set up a budget that includes your debts and also your living costs like groceries. Be careful about what you believe is a necessary cost, and what is not. Life does exist without television, and if you're in a money jam, it's these kinds of costs that will have to go. Eliminating television also impacts other costs. You can sell the television and, if you're using the typical 42-inch big screen most people own these days, you'll save on your electric bill as well. You may also have to make hard choices about pets, second vehicles, mobile phones, and other items your budget cannot afford right now.
Once you've figured out all your costs, and hopefully have found a way to begin to pay back your debts, contact your creditors, one at a time. Explain your situation, and tell them what you think you can manage each month. Contacting your creditors before they contact you can save your credit score. Sometimes, if you make a deal, they won't report your credit, or at least won't downgrade as much. Either way, you'll feel much more in control if you call them and strike a deal than if you're tracked down by a collections agency.
by: Molly Wider
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