Colateral Murder

Getting in over your head when it comes to debt is a lot easier than it is to get out of, and in some cases expensive. Some people who seek relief end up looking for help through credit counseling, debt consolidation, and as a last ditch resort, bankruptcy. Some of these companies can help, you have to watch out for certain things. For an example, if you are looking for debt consolidation, be wary of companies that divide up your payment to them into amounts that are so small over all your creditors, that your debt can actually go up at first, and your credit score be totally ruined.

Debt management companies, if this is the way you want to go are much better. They sit down with you, find out what your debt is, and try to come up with a plan to be debt free in a certain amount of time. In addition, they also have the knowledge and the skills to negotiate with credit card companies and financial institutions to lower or even eliminate interest, over the limit fees, etc. Over time, you have paid off your bills, and but this doesn’t always mean your credit is any better.

Now there are more than a few problems with either of these types of money management companies. One is that some can be expensive. The other problem, and perhaps the most important, is that in 95% of the cases, unless you unsecured debt is $15,000 or more, they aren’t going to help you. Unsecured credit are personal loans, credit cards, etc. A secured loan is a loan that has collateral, such as the title to a car or boat, and the deeds to any property.

So what about the people who are struggling with debt, but it is under $15,000? Here are some tips for these people. It starts with sitting down and getting out all your bills for one month. Rent, car payments, credit card loans, utility bills, everything. This is your secure and unsecure debt. Then, you need to really look at your check book, or bank statements, and estimate how much you spend each month in consumable items, gas, food, toilet paper, etc.

You need to get a piece of paper and prioritize your budget. The most important bills that are paid each month, rent or mortgage, insurance, vehicle loans, etc., you put at the top of the list. Then you put down what you spend in utilities, phone, electric, cable, etc. The reason you put these first is that if these bills aren’t paid each month, you will be homeless, without a vehicle, and sitting in the dark.

Now the next part is your credit cards. You need to go online, if possible, go to the card website, and download their policies on interest rates and annual fees. Where many people go wrong with credit cards is that these companies offer to send out cards with low or zero interest for the first few months, but after this the interest can be 21% or more, compounded daily.

Now if you just pay the minimum monthly payments on your credit cards, you will never pay them off in a timely manner. You can continue with these payments for the moment. You need to pay these credit cards off, once and for all, which will be addressed later.

Then you need to figure out all your income. This means moneys from work, dividends, unemployment, etc., adding everything up. If you find that your debt is higher than your income, you are in trouble. The first thing is to lower your consumable expenditures. For an example, if you are in debt, you shouldn’t be going out to the movies all the time, out to eat, etc. if you just can’t go without some of these things, rent a movie, (1) and make the dinner yourself. Instead of buying only the best products, food, clothing, toiletries, then buy generic or store brand products instead.