Stuck With Debt

For many years now, the rate of consumer debt has been growing steadily, year after year. At the same time, rates of personal savings have been declining, thus leaving people with a smaller and smaller cushion to help them through a financial crisis.

It is no wonder then, that even the smallest financial setback, like car repairs, home repairs or the loss of a job, can trigger a dangerous spiral into ever increasing levels of debt. It may seem like you are stuck with debt, but there are steps that smart consumers can take to reduce and eliminate what they owe.

Unfortunately today financial planning is taught mostly in the school of hard knocks. Very few schools teach financial matters in any great depth. As a matter of fact, it seems that many teachers, and many parents for that matter, are clueless on subjects financial. Therefore, unlike other important life skills, financial planning skills are unlikely to be passed from generation to generation. This leaves many young adults ill equipped to handle the financial stresses they encounter, both in college and in the workplace.

Not too long ago, it was relatively difficult to obtain a credit card. I remember wanting a credit card of my own when I started working, and being denied again and again because I had no credit history. The only place that would provide me with a credit card was my own bank. Once I had that first credit card, though, it seemed like the offers just started rolling in, and they still have not stopped.

That was a long time ago, however, and it seems that banks are no longer so picky about extending credit. These days, it is not unusual for teenagers to be offered credit, even before they have left for college. If you are a parent of a teenager, you may have noticed these offers in your mailbox. With younger and younger people getting credit cards of their own, it is more important than ever to learn how to deal with credit card and other debt.

The most important step in dealing with debt is to make, and stick to, a realistic monthly budget. However, you would be surprised how many people are totally lost when it comes to creating a budget for themselves and their family. Making a monthly budget is certainly not a fun thing to do, and it is unlikely to make the top 10 list of things to do this weekend, but it is an important fundamental step to getting a handle on your finances and getting yourself out of debt.

Creating a budget can help you find places where you can cut back and have more money to use to pay off your debt. Even saving a few dollars a day can go a long way toward getting your debt under control. A good understanding of the expenses that are truly necessary and those that are strictly optional can help you budget your money effectively no matter how large or small your income.

Once you have squeezed out all the extra money you can, if you are still stuck with debt, it may be time to talk with your creditors directly. You may be able to negotiate more favorable terms with your creditors. Just a small reduction in the interest rate on your credit card debt, or the waiver of a couple of penalties, can go a long way toward helping you pay off your debt.

When negotiating with your credit card companies, always remember that it is in their interest as well as yours that you do not declare bankruptcy. Do not be intimidated or afraid to ask for the terms you need to repay what you owe. In some cases, the bank may even be willing to accept a lower repayment amount. It never hurts to ask.

If you feel like you are stuck with debt, don’t despair. There are plenty of people who have successfully dealt with their debt and gone on to enjoy the benefits of financial freedom and a debt free life.

By: Ryann Cairns | sosdebt.org

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