How to Deal With and Get Out of Debt
At the beginning of 2012, the Reserve Bank of Australia published new figures on credit card debt amongst consumers. According the to the new figures credit card debt is at an all time high of over 50 billion dollars. The average debt each Australian citizen is carrying around is about $3300 per card. (Clancy Yeates. 2012 Jan 12, http://www.smh.com.au/money/borrowing/plastic-debt-swells-to-record-50-billion-20120112-1px49.html) This is a staggering debt load across the country.
Is this your financial situation? Do you find yourself drowning in debt? The pressure of trying to pay for daily expenses and dealing with credit and other personal financial obligations can take a serious toll on your ability to provide for yourself and your family. There is no more time to waste; you must deal with your debt today.
If you find that you need help taking the initial steps to deal with your debt, financial counseling services may be available to assist you. By working with a counselor; you will have someone to discuss your financial concerns with and to hold you accountable for paying down your debts.
For those that are ready to start taking steps to control their debt, it’s time to start dealing with the debt head on. If you are unable to meet your financial obligations, contact your creditors immediately. Often times when consumers find themselves having financial hardships, they avoid the creditors for fear of the outcome. When you ignore the problem, it only gets worse. By talking with your creditors they may be able to help you by making some pay arrangements until your hardship passes.
If you have a debt that has been sent to a collection agency and you want to set up a repayment plan; only agree to an amount you can comfortably pay. People often feel pressured by these agencies to agree to exorbitant amounts of money. They realise soon after that they are incapable of making the payment which stresses them out even more. Be honest with the representative and come to an acceptable agreement based on the funds available after taking into account your monthly living expenses.
Getting out of debt should be your first priority but, use these financial steps in preparation for becoming debt free.
1. Set Up An Emergency Fund. Save $1000 as quickly as possible and then leave it in a savings account for emergencies. This money will be used to take care of any small emergencies that come up while you are dealing with your debt. Most emergencies that befall consumers are less than $1000. By setting this money aside you can take care of your debts without worrying about unforeseen financial problems.
2. Prepare A Debt Repayment Plan. Gather all of your bills together and use a debt repayment calculator to input all of your information. Start with the lowest bill, regardless of the interest rate and add each additional bill until they are all annotated. Then decide on an additional amount of money that you can allocate to pay your debt down. The calculator will provide you with a month by month payment plan that will show you how to pay on each debt until you are completely debt free. Print a copy of your debt repayment plan and place it in a spot where you can see it daily. This will help to keep you focused on the task at hand. Your debt will be paid off before you know it.
3. Stop Using Credit. Until you can get your debts under control; stop using credit. If you can’t pay for what you desire with cash, then do not buy it. This is the time for discipline. Slow down on your spending by cutting up your credit cards and using cash only.
4. Bankruptcy. If you are unemployed, unable to work due to illness or injury and have no other means of income, you may have to file for bankruptcy. Always use this as a last resort. This is not an easy way out of debt, and there are very serious implications. Exhaust all other insolvency options prior to filing.
As personal consumer debt continues to grow each year; you must face your individual responsibility to repay your debt. A good financial counselor can point you in the right direction and help you to begin decluttering your financial life. If you are in serious debt, make a change today. Slow down your spending, stop using credit, and prepare your spending plan to repay debts. By focusing on making your debt a thing of the past, you future will look a lot brighter.