For those who are falling behind financially, bankruptcy is the last possible option. There are ways to get out of debt, and although it will take time, patience, and likely some financial and emotional suffering, it is much better for your financial future to attack your debts rather than declare bankruptcy. To resolve your debt problem, you must confront it head-on, get angry, and take action. There are many shady lending practices that get people into difficulty, but you are ultimately responsible for your finances, so step up, accept responsibility, and take action.
The first stage in getting out of debt is determining the total amount of debt owed. If you haven't taken stock of your financial situation, you have no idea how much and to whom you owe. Having a feeling that things are not going well or maintaining a mental tally is insufficient. It needs to be on paper and glaring you in the face.
Take out all of your monthly bills, credit card and loan statements, sit down with a pencil and paper, and write in vertical columns the name of your creditor, the balance owed, the interest rate, the monthly minimum payment, and the monthly interest paid for each account. Then, add up the totals for each column. If you are like forty percent of American households, you owe at least ten thousand dollars. If the sums are greater, it may be almost overpowering to consider paying them down.
Once you have gotten over the initial jolt of seeing your debt in numbers, it is time to formulate a plan to begin paying it off. The best method to do this is to create a monthly budget, which gives you complete control over where and how your money is spent. A budget enables you to identify where you are wasting money and eliminate those expenditures. This frees up cash flow that can now be applied to your obligations.
A good method to motivate yourself is to pay off the smallest debt first, then the next smallest while incorporating the previous debt's payment into that one. Just eliminating the first two or three debts can keep you motivated to continue attacking, and when you reach the larger debts, you will have enough momentum to breeze through them.
Finding quick methods to earn extra cash is also extremely useful. Have a garage sale or sell your items on eBay like millions of other individuals. Part-time employment can expedite the process. An extra $1,000 per month can have a significant impact on your ability to escape debt. Any additional funds will rapidly reduce these balances, allowing you to become debt-free sooner rather than later.
You can negotiate with your creditors to reduce interest rates, waive fees, and even reduce monthly minimum payments. All creditors want their money and will work with you if you explain the situation. As long as you send them something each month, the majority of your creditors will be content and leave you alone.
Filing for bankruptcy is not the best method to eliminate debt because there are better alternatives. If you are aware of how much debt you have and meticulously manage your monthly budget, you can begin to alleviate an overwhelming financial problem.""
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