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In our world of dizzying change, nothing is
more true than the time honored statement that
circumstances always change.
No where is this more true than with financial
issues.
Have you ever borrowed money, or charged up the
VISA card at Christmas, all the while telling
yourself that you would pay everything off with
a coming tax refund or bonus?
Sound familiar. And then what happens when the
bonus money arrives?
Let me guessÖ.circumstances changed, the
car needed brakes (or the kids needed braces,
etc), and the VISA debt and interest charges
keeps piling up.
Unless you have a plan, you will always be
caught in the unpredictable grip of
ìchanging circumstances.î
This is a slippery slope that can very quickly
can become serious financial stress. Consider
the fact that Americans are declaring bankruptcy
at record rates. One in every 100 families is
affected by a bankruptcy.
I was on this slope 10 years ago. Declaring
personal bankruptcy and filing for divorce went
hand in hand.
One of the most insiteful moments of the process
was preparing a written log for the trustee of
all of our spending for the 5 years leading up
to bankruptcy.
While all of the individual decisions made sense
in the moments that they were made, they looked
totally foolish in the context of the
ìbigger pictureî
In other words, constantly changing
circumstances drove us off our financial
roadmap.
Consider this five step plan for getting on, and
staying with, your financial roadmap.
Step No. 1: Make a list of what you owe &
prioritize: Put all your bills in a pile. Then
list your debts in order, starting with the
largest balance first. Then prioritize your
repayments (ie paying down the highest interest
rate first).
Step No. 2: Eliminate credit cards and don't
roll over balances. Once paid off, notify the
company that you want to close the account.
Step No. 3: Make a spending plan. Change your
free-spending ways. Track the money that's
coming in and going out. Use a debit card
instead of your credit card. Download your bank
transactions into a computer program for easy
categorizing.
Step No. 4: Be careful about the equity in your
home. Billions of dollars worth of equity has
been withdrawn from millions of homes in the
last few years. But many people pay down credit
cards only to charge them up again ñ and
then you don't have the safety net of the equity
in your home.
Step No. 5: Get help. For some people, the
problem of overspending is a psychological one.
Spending can become a habit that's as difficult
to kick as alcohol, drugs or gambling.
Sometimes, its due to circumstances they truly
could not avoid: medical bills or divorce or
loss of a job.
You can talk with a credit counselor on a
private basis. It only appears on your credit
report if you enter their debt repayment
program.
During this holiday season, as you consider your
finances, remember that Americans are now
carrying $683 billion in revolving credit card
debt. 47% of the people who paid less than the
full amount on their credit card bills in a
recent month, made only the minimum payment
due.
The good news is that planning and professional
help will definitely help you turn things
around.
Case in point: I went from bankrupt with zero
assets living in a boarding house, to gainfully
employed, running my own homebased business,
with 2 houses and excellent re-established
credit.
In other words, it can be done.
About the Author
Pay-off-debt-now.com is run by Drew Harris
and is a one-stop-shop web portal for those
facing crushing debt issues. Multiple pages of
resources, referrals and tools. Expert advice on
credit cards, loans and avoiding bankruptcy.
http://tinyurl.com/4bbum
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