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Monday, October 23, 2017

Are Your Debts Giving You Nightmares?

Posted by PattiM on

We’re being hammered by a recession, jobs disappear in a flash but the debts we owe continue to climb. What is a person to do?

You’re used to being able to find credit and the first impulse is usually to go find more credit — consolidation loans or home equity loans. With interest rates being low, that seems to be a logical way to deal with those debts, as long as you are working and the rates stay low. In this volatile economy, you have no guarantee either a job or low interest rates will be stable.

There are options to dealing with your debts based on your ability to pay. The most important step you can take right now is — DON’T Panic! Take a deep breath and take a good look at the situation.

You’ll need to assemble some information in order to have a good look at the situation. You’ll need to know what your family income is, what your budget each month is and a comprehensive list of all your debts.

Your Budget

It’s surprising how many people never write out a budget. Many people will write out a list of what bills have to be paid each month and subtract that from their income. That is one step in the right direction.

The next step is to know exactly where your money is going each month. A careful tracking of every penny spent for at least a month can be a real eye opener. We see the major expenses flowing out of our income, utilities, insurance, mortgage/rent, car payment, loan payments, credit card payments etc. What we don’t see and often miss, is the smaller payments which add up.

We’ll pick up a coffee, cigarettes, papers, go out to lunch, do some shopping and just don’t track how much we’re spending in the course of a month. Keep track of your cash expenses, even for the little things. Pull out that credit card statement and take a look at what you’ve charged. Sort the expenses into groupings to get totals of each group.

Are there expenses you can cut? Will those cuts allow you to save and develop a cushion for emergencies? Will those cuts allow you to just stay abreast of your current debt load?

If the expenses you trim allow you to develop a savings program while staying abreast of your current debts, you’re probably going to okay at least in the short term. You can focus on increasing your family income and paying down your debts.

If the expenses you trim only allows you to stay abreast of your current debts or doesn’t even cover them, you’ve got a problem and need to seek help. The question then becomes, where to look for help? Your banker? Credit counselling? Trustee in bankruptcy? Insolvency Counselor? Mortgage company?

In my next post, I’m going to explore those sources and make some suggestions where to start.

Question: Have you taken a good look at your debt situation lately?


disclaimer: The contents of this post is based on circumstances current at the time of the post and are intended for general knowledge. For more specific answers to your questions about your own circumstances use our contact form or post a comment below. NOTE: For a FREE, confidential analysis of your situation click here.

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