The Way to Debt

It’s a nice warm Friday afternoon and you decide to treat yourself to a shopping spree. Why not…you work hard, you deserve it. Actually, you have gone on several shopping sprees in the past few months. You have shopped until you dropped so many times that your monthly billing statements are beginning to look like a stack of small poetry books from Walden’s Bookstore.

If you can barely keep up with paying your monthly credit card bills and you constantly wonder if there is way out of your financial situation, there are several options available. You can work 6 jobs and save your money. Maybe someday you will have enough saved up to pay off most of your debts, maybe before New Year’s Eve of 2026. You can hope and pray to receive a check in the mail from a benefactor. You can allow your debt to mount up higher than Mount Everest or “wake up” and consider consolidating your debts.

You can go through an agency to consolidate your debt or you can do it on your own. If you decide to consolidate through an agency, they will actually negotiate with the creditor and possibly lower your monthly interest rates. A debt consolidation agency will force you to close all of your credit accounts and give you a monthly payment that you can handle. The only downside is you will not have the ‘safety net’ of a credit card during an emergency.

If you decide to do it yourself, it takes a lot of discipline. First, you have to hide your credit cards and only use them during an emergency—pay off your lowest balance credit card first. Figure out your minimum payments on all of your cards and pay a little extra on the lowest balance card. Begin to practice using discipline in your spending. If you continue to just pay the minimum balance on the card, it will take years to pay it off. Get in the habit of paying more than just the minimum balance. Eventually, this will all pay off—literally. Once you get out of debt and back on track, you can enjoy one or two shopping sprees without getting back into debt.

Own a House?

If you own a home you can take out a home equity loan and pay off your credit cards. The only thing you should be aware of is that you will actually end up with less equity in your home and it will take time to earn back.

Now is the time to take care of your bad debt because it will eventually eat away at your finances. Don’t put off improving your credit any longer. Now is the time!