You found yourself in a very bad financial situation. You may feel emotional, hopeless, guilty or all of them. You are afraid of hitting rock bottom. Before that happens, you need to take the necessary steps to get your financial life in order. You need to look long and hard at your credit use and spending habits. It doesn’t mean a “debt consolidation,” program or a home equity loan .The word is PLAN.
Round up all credit reports, bill payment and credit card records, loan and mortgage records. You can find debt worksheets on line that will assist with making your plan. Most likely sections of your planning will be occurring at the same time.
Make sure your credit reports are accurate. This may involve some written communications with one or the other of the three major credit bureaus. Be persistent.
ALL of your financial obligations must be recorded in writing. This will be important for the money management part of the plan. All credit cards can be listed according to highest to lowest interest rate. Write down the minimum monthly payment on each card.
Figure out your disposable income. This is the amount of your salary that goes for necessities such as mortgage, car loans, credit card payments, utilities, other loan payments. When you subtract this amount from your salary, you will have your discretionary income. This is the income you can devote to reducing debt.
Decide which credit cards, and loans that you will pay down in order. For the first one you decide to pay down, pay as much more than minimum as you can. Pay the minimum on the others. When the first is paid off, start applying that same amount to the next debt in line. It won’t be a fast process.
Commitment is definitely needed when you take on this major project. You will have to change your lifestyle. You have to stop living above your means. There will be no more unnecessary spending. Buy only essentials, eat at home, find alternatives to travel. The BIG MUST IS STOP CHARGING.
This situation didn’t happen overnight and it won’t improve overnight. Is it worth it? This is your financial life. You are the one who has to save it.
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