Have you examined your family finances lately? Are you
shocked and anxious about the amount of debt you have?
If your New Year's resolutions include getting out of debt
or getting your financial house in order, here are ten easy
steps for regaining financial control in the New Year:
1) Seek help. If you're not sure how to proceed, or you're
feeling too overwhelmed to act for yourself, call a non-profit
credit-counseling program for advice and assistance in
working with your creditors to set up a repayment plan.
Consumer Credit Counseling Service has offices throughout
the US. Call 1-800-388-CCCS, 24 hours a day, for an office
near you. You can also find information about debt problems
from your local church, library or bank. Look for information
online as well.
2) Contact your creditors. As soon as you're aware you
won't be able to make a payment, contact your creditors.
Creditors are more likely to work with you if they're contacted
before the payment is actually overdue. Debt collectors are
trained to solve payment problems, so don't be afraid to be
honest with them about your financial situation. Stay calm.
If you commit to paying the bill by a certain date, be sure
you follow through on that commitment. The creditor won't
be likely to work with you again if you don't keep your pay-
ment promises. If you can't make your minimum monthly
payments, write to each creditor individually and see if
you can work out smaller regular monthly bills. Be sure to
explain to them why you fell behind in your bills, your
current income, your other financial obligations and the
exact amount you can pay them each month.
3) Cut up all credit cards and send them back to the issuing
companies immediately. Officially close all credit accounts.
A temptation when you start seeing lower balances on your
accounts could lead you to charge the credit limits right back
up again if the accounts remain open. Don't take out more
loans or open any new credit accounts until back bills are
paid in full.
4) Set a frugal budget and live within it. It's usually easier to
decrease spending than increase income. Don't make any
purchases above and beyond the absolute basics until you've
made some headway in catching up on your back bills.
Consider selling assets to find more money for your debt
repayment. Even holding a large garage sale can sometimes
generate enough money to help pay an immediate bill or two.
5) Prioritize debts. Mortgages, child support and any debts
that have gone to a collection agency are a priority. After
you've identified the first priority debts, look for the credit
companies that are charging you the most interest.
6) Pay each creditor something. No matter how small the
amount you're able to pay, it will show good faith on your
part as you try to negotiate payment arrangements.
7) Track personal spending. It's important to identify any
holes where your money is draining out. Keep a detailed
record of every expenditure for one month, no matter how
insignificant. Little expenses on a regular basis add up
quickly. Carry a small notebook with you and write down
every single purchase. Now you'll know where your money's
going.
8) Plug any holes discovered from the spending record.
Small leaks sink great ships … even financial ones.
9) Plan ahead for annual expenses (i.e.: insurance, car
licenses, medical deductibles, etc.).
10) Set long-term financial goals. After setting concrete,
definite goals for future financial health, make all current
financial decisions with your future well-being in mind.
Keep the end result in mind -- debt-free living!
The key to getting your finances in order is to control spending
and funnel that money into retiring your debt in an orderly
fashion. Make sure that your debt is not growing, but shrinking
a little every month. As your debt disappears (and it will, if you
keep after it!), plan to put the money you have been putting
toward debt reduction into a savings plan. That money will
start earning you money rather than paying off growing interest
payments. That will be a happy day!
About the Author:
Deborah Taylor-Hough (free-lance writer, wife and
mother of three) is editor of the free ezine Simple Times
and author of several books including "Frozen Assets: Cook
for a day, eat for a month!" (Champion Press) and
"Frugal Living For Dummies(r)" (Wiley Publishing).
Visit Debi Here.
