Knowing where you stand in the world financially is a first step to debt rehabilitation. Taking some time to analyze your current financial circumstances is a strong beginning and once you know exactly what the position is then you need to share the information with your family. This way no one will have a false impression of how things really are. You probably are facing debt challenges if:
1. You owe more money than you own in assets.
2. You spend more than you earn every month.
3. More than 50 percent of your total income goes towards servicing your debt.
4. More than 25 percent of your income is spent paying just interest on your debts.
5. More than one of your bills is two or three months in arrears.
6. You have to decide which debt you are going to pay each month.
7. You have been requested to return one of your credit cards or store cards.
8. Your bank account has been closed because of returned debit orders.
9. You fear answering the phone because it is more than likely a debt collector calling.
Debt Crisis is no joke and very stressful
When you are under pressure to keep your head under water it plays havoc on your health, family life and well being. You may have trouble sleeping at night because of the pressures and not know exactly what to do. The only way out is to work out a plan of action and be disciplined enough to stick to it no matter what!
This plan of action and goal to be debt free must be faced with persistence, focus, commitment and vision. The simple solutions are; cut down on your variable spending and put the extra money towards your debt payments. Earn extra money if this is possible and use all of it to pay off debt. Later on this will become disposable income.
Once you have figured out the maximum amounts you can pay off each month on your debts, start with paying down the debt with the highest interest rate first. This will probably be for most people your credit card balance. In the meantime continue to service you’re other commitments.
Another important point is identifying what are unnecessary expenses and curbing them. You can also try and reduce your fixed expenses, take steps to lower your normal household bills like utilities, see whether you can use your mortgage for debt consolidation rate. If your credit record is still good and you have a good payment history, you may consider asking your credit card company to lower the interest rates you are being charged. When you have got your debt under control then take steps to eradicate altogether. This is what debt freedom really is!
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