CBGE

About the financial crisis & how we cope with it

Financial debt: is there a way out?

There are a lot of people who have serious debt problems. Usually the problem is caused by over using credit cards. Once you are in debt getting out is not easy but there are ways that you can do it if you are willing to put in the work.

The first thing that you are going to have to do in order to get out of debt is to stop spending money. There is no way that you are going to get out of debt if you keep adding to it. Therefore if you have a debt problem the first thing that you are going to have to do is to reduce your spending to the absolute essentials only. Once you have done this you can work out a plan that will get you out of debt but for the short term you are going to have to stop spending money.

The next thing that you are going to have to do is to determine how much debt you actually have. Most people with debt problems underestimate how much they actually owe. Get copies of all of your bills as well as your credit reports so that you can determine how serious the problem really is.

Once you know how much debt you have you can start to formulate a plan to pay it off. This is going to require that you be able to make significantly higher than the minimum payments on each of your credit cards. Therefore you are going to have to create a budget that leaves you with enough money to make these payments. There is no getting around the fact that you are going to have to make some pretty big sacrifices if you are going to be able to do this.

Once you have determined how much you can afford to pay towards your debts each month the best option is to pick one credit card that you pay off first, ideally the one that has the highest interest rate. You will obviously have to keep making the minimum payments on the other cards but beyond that put everything else into this one card. Once it is paid off you can move onto the next one. You will find that as each card gets paid off the next ones get easier as you have more money available to put towards them.

In some cases you will find that you have so much debt that there is no way that you can pay it off. If this is the case you will have to look at your other options. You have a few choices, credit counselling, negotiating with your creditors or bankruptcy. All of these have serious consequences and should only be used as a last resort. You will need to talk to an expert to help you with these options.