10 Steps to Conquer Debt

TEN SIMPLE STEPS TO CONQUER PROBLEM DEBT

If you’ve identified a problem in the area of personal
debt, you’ll need to
set about remedying the situation. Here are easy steps
to regaining
financial control:

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 on-line 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 payment 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. The
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 anymore 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 just 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
debt that has gone to
a collection agency is 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 for one
month of every
expenditure, 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 up any holes discovered from the spending
record.

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!

Cindy Sue