“Be assured that it gives much more pain to the mind to be in debt, than to do without any article whatever which we may seem to want.” -Thomas Jefferson - the 3rd President of the United States

There is a harsh reality you need to face if you are in debt. If
this is not a direct result of a medical situation or sudden job loss,
then it is solely a result of choices you have made up to now.
You need to make some tough decisions and make some huge changes to your current lifestyle to resolve this situation. Being debt free is not going to be easy but if you are ready to begin your road to free yourself of debt then read further.

Know Where Your Money is Going and How to Spend it

a. Start a budget immediately and keep track of everything you
spend.
b. Stop using your credit cards immediately. As tempting as it may be to have the ability to just throw it on the card and pay it later, this is exactly the trap you have already set for yourself.
c. You need to start cutting expenses immediately and drastically. Make a list of what are your essential needs and be realistic here. A one hundred a month cell phone bill is not an essential and neither is an eighty dollar a month cable bill. Then go back and see how you can reduce your cost of these things even further.
d. Consider getting a second job. As poor as this economy is right now there may be a second skill that you maybe able to use to generate more income.
e. Consider getting a roommate. Be diligent on this one thought. Last thing you need is someone sharing your place and tells you they can’t pay you.
f. Use the three strikes your out strategy when making any purchase.
If you can't come up with three reasons why this purchase is truly necessary then its out.
g. Pay cash as much as possible versus using a debit card. Research studies have found that people spend more when using a debit card versus paying with cash.
h. Set goals on the amount of debt you wish to pay down and stick by it.
i. Think long term, don’t let the funk set in because of your current situation. If you stick with a plan and set goals you will be successful


Mortgages: The current housing market has seen a huge surge in delinquent mortgages and foreclosed homes. If you are currently having difficulty keeping up with your payment you need to take action now. Call your current servicer of your loan and see if it can be reworked. The Housing and Economic Recovery Act of 2008 may also be something that may help you out of your current situation. There are various links to websites on left of this page that you should thoroughly research that explains these options. If you still cannot resolve the situation then consider a short sale. A short sale is when a property is sold for less than the current balance owed. The first stage of this process involves contacting you lender. They are the ones that make the decision on whether you will be allowed to proceed.



Credit Cards: If your credit is good enough to trade down to a lower interest card by all means do it. In some cases if you contact your Credit Card Company directly and explain your situation they may lower your interest rate. You may be rejected more often than not but it is still worth trying. If your monthly payments are still too much for your budget then you may have to consider Debt Consolidation which is not Bankruptcy but may lower your credit score. Basically a Debt Consolidation company negotiates a lower rate on your credit card balances but you in effect give up the right to use the card ever again. Your monthly payments could be reduced in the neighborhood of 35% on average. Make sure to shop around for the best rate reduction. Keep in mind Medical Bills are not covered in Debt Consolidation as well as American Express and certain Chain Store cards. Pay close attention to what cards are not covered under each company’s guidelines. No matter what debt Consolidation company you choose, investigate it thoroughly. Like anything else in business some of these companies are great, others may not be as good and there are many of them. Don’t sign up with the first site you research unless you feel comfortable and only after you’ve investigated other sites.
Check the comments page relating to the company to see if the situations mentioned reflect your own. Remember that the more “homework” you do on this subject most often will net you the best deal.

Car Payments: Depending on your credit rating you may be able to re-finance your vehicle to make your monthly payments lower. In many cases this may extend the life of your loan but at least will give you some “breathing room” until times are better. If your credit rating is low you still may be able to re-finance but at a higher rate.
When re-financing is not an option and your car payments start to fall behind it’s wise to consider selling if you have enough equity in the vehicle and trade down to something less expensive.

Bankruptcy: This is the last and most final solution which in theory wipes away most of your credit card debt but has the longest lasting ill effects. Your ability to borrow money at a reasonable rate will most likely be affected for a decade. If you own your own home you should be able to keep it but your ability to buy a new one in the near future is doubtful. Consult a Bankruptcy Attorney and go through with this only if there is no other option. Getting out of debt may sometimes seem impossible and it can be a long road for many of us. Staying consistent with your payments and budget plan is the key to success here.

At the end of this journey a debt free existence is a far less stressful one so stay the course and your quality of life will be better.

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