For anyone out there who has ever forgotten a payment or found themselves with more debt than their income could pay, you know how aggressive some of these creditors can be. When we found ourselves in deep debt, the calls got rude and insulting. We were blessed to be able to dig our way out of the mess before it got completely out of control. I just wish I had known then the things I know now.
1. Don't build up debt. There is a difference between credit and debt. Credit is borrowing against money you have (like when you use a credit card to buy something that you have been saving for - the money is in your savings drawing interest while you put the purchase temporarily on your card). Debt is when you borrow money with no means of paying back the purchase (like when you run low on funds at the end of the month so you begin buying things on one of your many credit cards. The new month will not bring enough income to cover the purchases).
2. If you already have debt you can't pay, call the creditors BEFORE your payments start being late. If you are upfront with a company while your account is in good standing then that company is more inclined to work with you during your problem times.
3. Don't make promises you can't keep. If you aren't going to have the payment at the end of the month, then don't say you will. Be realistic in your promises. A lie now will only hurt you even more next month.
4. Seek financial counseling. There are people out there who make a living helping others get their finances under control. Some of them charge a fee, but some of them do it as a ministry. Look on line, look through the yellow pages, or call a local church to find someone who can help you find your way to debt freedom.
5. Stop buying now. If you are already in debt over your head then you don't need to buy anything other than basic (food and a roof over your head) necessities. Cut every other spending that you might want to do. Get out of debt and make it a habit to stay that way.
6. Pay off highest interest loans first. Many systems recommend paying off the loan with the lowest balance. This is a good morale booster, but in the long run you will save more money by paying off the loans that have the highest interest.
7. Do consider a consolidation loan. If you have changed your spending habits and you have some equity in your home then you might look at remortgage to consolidate all the smaller debts into one loan that is a lower interest loan. Don't borrow more than is needed to payoff the current debts. It can be tempting to get cash back for a spending spree - but it won't help your situation in the end.
Getting into debt is easy. Credit card companies and other lenders send borrowing opportunities to everyone (even the family dog at times). Getting out of debt requires commitment, consistency, and sacrifice.
A debt free life will be a better one for you and your family now. It will also lay the foundation for a better life for you children tomorrow.
Kathryn Lang is a freelance writer specializing in family issues, financial responsibility, and working from home. She is a regular contributor to The Peculiar Club, and has been published on numerous websites as well as in print. She is currently available for writing assignments or speaking engagements.
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