Debt is fast becoming a major financial disease in households all across the United States. Many people feel that their backs are against the wall and feel they have little choice but to declare bankruptcy. Unfortunately this is not a good choice, particularly with the recent changes that have been made to the national bankruptcy laws that favor the rights of creditors and loan providers.
Bankruptcy is the last possible option for anyone who is falling behind financially. There are ways to get out of debt, and while it will take time, patience, and probably some financial and emotional pain, it is much better for your financial future to attack those debts instead of going bankrupt. Resolving your debt issue is about facing it head on, getting mad and doing something about it. There are a lot of shady lending practices out there that get people into trouble but ultimately the responsibility for you finances falls on you so step up, accept the responsibility, and take action.
The first step to getting out of debt is figuring out just how much debt you have. If you haven't taken an inventory of your financial situation then you have no idea how much you owe and to who. Having a feeling that things aren't good, or keeping a running total in your head isn't good enough. It needs to be written down and staring you back in the face.
Get out all your monthly bills, credit card and loan statements, sit down with a pencil and paper and in vertical columns write down the name of your creditor, the balance owed, interest rate, monthly minimum payment, and monthly interest paid for each and then add each column up for an overall total. If you are like 40 percent of American households you are at the least 10,000 dollars in debt. If the totals are higher then it may be almost overwhelming to even think about paying it down.
Once you get over the shock of actually seeing your debt in actual numbers it is time to build a plan to start paying that mess off. The best way to do this is build a monthly budget, which gives you total control over what your money does and where it goes. A budget gives you the ability to see where you are spending in a wasteful manner and cut those expenses out. This frees up some cash flow that you can start throwing at your debts.
A good way to get motivated is to pick your smallest debt and pay it off first, then once that's done pay off the next smallest while rolling the previous debts payment into that one. Just getting those first two or three knocked out can keep you motivated to keep attacking and when you get to the larger debts you have momentum that will roll right through them.
Finding quick ways to make extra money is also very helpful. Have a garage sale or join the millions of people who sell their stuff on eBay. Getting a part time job can speed up the process. As little as an extra $1,000 a month can have a big effect on you ability to get out of debt. Any extra money will knock those balances down quickly, making you debt free sooner rather then later.
Negotiating with your creditors to lower interest rates, waive fees, and even lower monthly minimums can be done as well. The point is that all creditors want their money and will be willing to work with you if you explain the situation. As long as you send them something each month most creditors are happy and will leave you alone.
Filing for bankruptcy is the wrong way to get out of debt simply because there are better options available. If you know how much debt you have and work your monthly budget carefully you can begin to find relief from an overwhelming financial problem.
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