by Steve on April 28, 2010
If you’re struggling to pay credit card debts, you’re probably feeling that you should never have started using credit cards, and that you’re somehow a bad person for getting over your head in debt. You’re not a bad person, and credit cards themselves are not bad.
One of the first things you’re going to have to do, in order to get out of your debt spiral and get your life back on track, is to understand that you are not a horrible person. It’s important that you understand this, so you can get out of your depression and despair enough to move forward and start getting yourself out from under all of this debt.
Almost everyone uses a credit card these days. No one intends to get in trouble. You, like everyone else, just allowed things to literally spiral out of control. Whether your credit card problems were caused by impulse spending, an emergency or a decrease in income, what caused it doesn’t matter.
At this point, you need to start looking forward and identify some ways that you can break out of the pattern of behavior you’re in.
Diagnosing the problem is the first step. Can you pay all your bills, even if it’s a struggle? Are you paying only the minimum on credit cards? Are you paying off credit cards with other credit cards? You need to understand how serious the problem really is, before you can know what to do about it.
If you’re able to pay all of your bills, but it’s a struggle, you may qualify for debt consolidation, or some credit counselors may be willing to help. Others will not speak to you until you’re a month behind on at least one payment. If you’re behind on your credit cards, cancel the accounts, cut up the cards, and seek credit counseling if possible.
Whether you work with a credit counselor or not, your first goal is to cancel all your accounts so that you don’t incur new debt. The next step is to make a plan for paying your creditors, and send them a letter explaining what you will be paying until the debt is cleared.
Many debt reduction experts suggest putting 20% of your income toward your debts, giving each creditor a proportional payment. When you pay one off, you add that money to the other payments.
While creditors will not like being told that they’ll receive an amount less than the minimum on your statement, many will not take you to court, as long as you do what you agree to do. They may put this on your credit record, but at this point, your credit record is not a big problem. The goal here is to get out of a growing mound of credit card debt and begin to get your life back on track.
The important thing to understand, in trying to get out from under crippling debt, is that you have to take care of yourself and your family, too. You can’t live on nothing. You need to create a plan that gives a portion of your income to your creditors, because you do owe the debt. But make sure you’re taking care of your own needs first, because your health and your family come first.
Tagged as:
debt management
by Steve on February 26, 2010
Salon reports on a man who, faced with foreclosure, bulldozes home.
If there are any among us who still don’t believe that this Great Recession is devastating, I offer you the story of Terry Hoskins of Moscow, Ohio.
Hoskins, who had been trying to work out a loan modification with his bank to save his house from foreclosure, has made good on his promise to bulldoze the house before the mortgage company could reclaim it.
Flying an airplane into an IRS building in Austin, Texas over similar frustrations isn’t cool. But this action I like.
I can’t begin to tell you the number of people I know or have met who are struggling to keep their homes. They are decent people who want to remain in the house and maintain it. All they need is a little relief from their banks.
But instead of helping their customers out, the banks are only too happy to evict them. Often, the house remains vacant and the bank has to pay for up-keep. The property erodes. And instead of taking in some money (albeit a reduced amount) for the house, they lose any flow of income.
And some family finds itself out on the street.
A family that probably shouldn’t have qualified for the loan in the first place but that was granted it because of the bank’s own predatory lending practices. Or a family whose head-of-household has simply been laid off and fallen on hard economic times.
I spoke the other day with a female friend — a single mom — whose ex-husband has hidden assets from her to avoid paying his fair share in child support and alimony. She works three — count ‘em, three — jobs in an attempt to keep a house that is home to her and her four children — all of them college-aged, all of them not getting any financial assistance from their father for their educations.
She has tried to utilize the programs that are supposedly available to help her keep her home. But the system is far stronger than her. It has beaten her down.
Now, this is a tough woman who has successfully battled cancer. She’s someone I admire because she has been doing all of the “right things” to provide for her family without outside assistance. She probably could have gone on welfare rather than work three jobs, but that’s just not her nature.
And the improvements she’s made on this house over the years — it has an amazing garden and yard, the result of long hours of her tender loving care.
Of course, none of this matters to the bank. The answer is “no” to her request to refinance the house. It’s a sure-fire bet that once they evict her — as surely they will — the value of that property will decrease.
I doubt that my friend will rent a bulldozer and knock the house down like Terry Hoskins did. But there are millions of Terry Hoskinses and people like my friend who have reached the end of their rope. They are our friends, our neighbors — and sometimes us.
The nation should be in crisis mode over this. Real programs to help people — laws to protect them — are needed. The time for words is over. It’s time for action.
The discontent runs much deeper than the superficial analysis of the Tea Party movement would suggest. But, as usual, those insulated within the Beltway are the last to know. And those who do know, on Wall Street, are too busy counting their bonuses to care.
Tagged as:
Foreclosure Stories