No mater how you got into debt, either through bad choices or bad luck you can stop your debt from spiraling out of control.
A lot of the advice mentioned may seem pretty obvious, it's because they have the best results. You have to bite the bullet and look at the mess you are in. Don't beat yourself up anymore, and don't hide in the sand hoping it'll all blow over. Push up your sleeves and dive in, it will get better if you work on it.
1. Know what you have.
Get paper, pens, a calculator and start corralling all the necessary paperwork. Get the credit card bills, home loans, banks statements, student loans, car loans, boat loans, all of it.
Once you have added up all the numbers, and the smoke has cleared take a deep breath and hold on tight, there's more work to be done.
Read all the fine print in your credit card statements and start taking notes.
How much do you owe them, what are they charging you for late payments, and minimum payments, are there any mistakes, what are the balances on those cards?
Once you know what you have gotten yourself into, you can start to get things under control. If this seems too daunting , or you are bad with numbers, speak to a credit councilor and have them help you crunch the numbers.
2. Cut up your credit cards.
This isn't a joke. I know this seems rash, but if you can't use it, you won't use it.
Why cut it up? I know you use these cards to pay the bills and put food on the table, good for you. You may also use it to get some fast-food, pick up the dry-cleaning and many other things. Ten dollars here twenty dollars there starts to add up real quickly. Get out of the habit of using those cards to pay for things you don't need. Putting them away doesn't work. There has to be a physiological connection with this. Don't just cut it up where you can still read off the numbers and put it back together later when you want to order pizza. Many paper shredders have a spot for credit cards, yup use those. Don't have one? Go to your bank and have them destroy the cards for you. The bank will have top of the line shredders that will protect your identity, and you won't be digging in the trash for it later in a week moment. Use cash and learn to budget it.
3. Pick a debt to pay down.
You can either pick the highest, (if you like to) or the lowest (to feel empowered) and start attacking it with money. Look for extra cash and put that money towards paying off that debt. Pay more than the minimum payment, give them as much cash as you can afford. Find ways to earn extra money with side jobs, or a second job. Mow lawns, babysit, walk dogs, have a huge sale and get rid of junk. Slash your food bill in half. Do whatever you can to get extra money and throw it at that debit. Keep a chart and cross off amounts you owe; seeing that debt get smaller will keep you stay on track. Once that debt is paid down, attack the next one with gusto.
There is also an option known as, "Pay For Delete".
This is used for small debts, under five hundred dollars. How this works is you agree to pay the collector either the whole or at least 25% of the debt you owe them, and they remove the debt from your credit score. It sounds too good to be true, but there are a few catches to this process. First, you have to get the name and address of the collector and request that they send you a debit validation letter. They may not have any real information on the debt, other than your name and the amount owed. If they send you a letter with documents of your debt, like the name and place of the original debt, and canceled checks from you that is the actual amount you owe. If they send you a print out from their own computer, that is not proof. Who knows where they got that number from, and if they haven't done anything to it.
Next.
Once you have all your facts, write them a letter and mention these things.
1. You would like to settle your debt with them.
2. Offer them what you think is fair. Don't be silly and offer them fifty or one hundred bucks, they won't take it.
3. The tone of this letter should be a business deal, they'll get their money if they agree to your offer.
4. Insist that they must agree to delete your debt from their computers, not marking it as paid. That won't work.
After you send that letter, now comes the tough part; you wait. This could take up to thirty days to hear back from them. In the meantime, go about your life and don't worry about it. You are taking the bull by the horns here and that should feel amazing! Till you get this settled, don't send them any money. If they take the money without having to jump through your hopes, they will.
Don't let them get away with it. You can wait, wait for them to respond.
Keep in mind that they don't have to accept your offer no matter how reasonable you think it is. Despite the bad reputations of debt collectors, they will listen to money, er, I mean reason so you will hear from them about getting paid.
Have this all in writing, don't just accept a word on the phone, wait for a written response.
This letter should have a signature on the bottom and their official business symbol on it.
If they don't respond, call them and see if you can talk to a supervisor about your letter.
Once you have a written and signed agreement, send them the money. Payment with a money order is best. You don't want them to have access to your banking account.
Be advised that these are just a summery of what a pay for delete process entails.
I have no claims or proof that this will work, it is just an option.
4. Put money aside.
It never fails, just when you were starting to get a handle on your life, Murphy and his law move into your life. The car needs a repair, there was an emergency tooth pulling, the roof is leaking. Any number of these things that happen in life can make things worse if there isn't any money to throw at them. Before throwing money at the debt, be sure to have some money put aside into an account that isn't easy to deep into. Scrounge together at least a thousand dollars, a few more if you have that kind of money. Even if all you have is five hundred dollars, hang on to it. Having some money in a time of need is better than non. This will save your sanity, and make you feel more in control in those times. When the time comes and the money is needed, pull it out and take care of the problem. When the dust has settled, put money back into it as soon as you can. Stop paying down the debt for the time being to bring up the savings again. Once that is back, start attacking that debt again.
5. Budget.
Keep track of where the money is going, and pinch those pennies.
Get rid of any non-essentials, coffee shops, magazine subscriptions, cable TV, cash withdraws.
There are many ways to cut cost and save in a budget. Maybe you have already thought about this and are living on a bone cut budget, great! Keep doing this and it will get easier.
Remember, you got into this mess but there is no shame in getting out of it.
You will not have to live this way forever, and once you are free of debt your life will become less stressed, and others will see the improvement.
Good luck.
Do not take my word on it, I am not a professional adviser and found the information I did via research.
No comments:
Post a Comment