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Dealing With Debt

Todays Date: December 15, 2018

Many people face problems when it comes to debt and managing their personal finances. Not surprisingly, debt problems are one of the most stressful areas of one’s life and are often cited as the reason for relationship problems and debilitating stress. With this in mind, resolving your financial problems needs to be done effectively so that you not only improve your finances and avoid having to deal with debt collectors (or worse) but avoid larger problems like stress.

As an initial step, it is recommended that you calculate your total debt level by organizing your unpaid bills and arranging them from the smallest amount to the largest. Next, decide the amount that you are able to pay (extra, preferably) each month. The most essential thing is to balance your budget on a monthly basis. For a longer term plan, you can prioritize your debt based on interest rate, focusing first on the higher rate debt and graduating to lower-rate debt as the higher priority debt is paid out.

Debts that need to be paid immediately should always take priority. If they remain unpaid, the creditors have the ability to take severe action against you, which is something you do not want. Past due rent and mortgage payments are examples of ultra-high priority debts. If you are seriously past due and cannot repay any debt without risk, consider delaying payments until a full budget has been completed, which we discuss next.

With the high priority, immediate debt dealt with, the sense of urgency will dissipate. This means you can start dealing with debt with a greater focus to detail, particularly when it comes to refining your monthly budget. This often-boring process will not simply measure your monthly expenses, but it will allow you to see what is left at the end of each month, which you can dedicate to a more consistent debt repayment program. A huge advantage with a budget is that it highlights areas where you can make deeper cuts to your monthly expenses, allowing you save even more money.

In the event that you are seriously past due, you will want to connect with your creditors. Now that you have completed a full budget, you know better how much you can afford to repay each month. This will allow you have a meaningful negotiation with your creditors. Dealing with debt this way means revealing as much as possible to your creditors about your financial situation. If you are not comfortable discussing these details over the phone, you can write a letter.

Now that lenders are taking a bit of heat about responsible lending practices, nearly all of them offer third-party services to people who are having a tough time dealing with debt. These no-cost services will offer tips and knowledge about how to remedy your debt situation and regain control of your personal finances. If you are having problems surviving from month to month or if you are stressed to the max about whether you can overcome your debt, you should consider taking advantage of such programs.

Since everyone’s financial situation is so unique, providing generalized recommendations for dealing with debt and managing personal finances becomes ever more difficult. Still, the above provides basic suggestions. If you are looking to take your personal finances to the next level, consider sites like Help Fix My Finances.com where you can work through your own, unique financial plan.

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