By Trace Morgan
In the current economic situation even people who have paid their bills on time find themselves drowning in debt. One change in circumstances such as loss of a job, work hours reduced or a medical crisis can turn a budget upside down. Though we are told there are government plans available to help with mortgage problems, most people are finding that help not available to them.
Predatory lenders are changing credit card fees and lowering credit limits. Mortgage companies are often unwilling to extend deadline or help consumer modify their loans. One missed credit card payment can throw you into massive interest rate raises on all credit accounts you hold. Personal loans, car loans, and credit are hard to qualify for in this market and available only to those with top credit ratings.
There are a few things you can do to survive the rough times. They involve a new way of thinking about what you use and what you need – and about what you can do without. Three basic steps to surviving a financial crisis are:
1. Stop charging. This sounds easy but for those who routinely use credit cards for everyday purchases, it’s a big step. Be honest with yourself. Would you spend the same amount in the grocery if you were paying with cash? Would you buy that extra pair of shoes if the money came straight from your bank account? Don’t cancel your credit accounts as that could hurt your credit rating.
Just put the cards in a drawer and leave them there.
2. Pay your bills before buying anything at all. Many of us fall into the habit of going to the grocery or the mall on payday. Change that schedule and buy nothing until you pay the bills due for this pay period. There’s a reason so many stores place their weekly ads from Wednesday to Friday – that covers the payday period of most consumers. For consumers, there’s a psychological trigger in paying their monthly bills before doing any shopping. Whether you pay online or write checks, you see the money gone from your account even if only on your check log. That lower number stays in your mind as you do your weekly shopping.
3. Downsize your monthly expenses. How many cell phone minutes do you really need to use each month? Could you reduce your “unlimited calling” plan to a 300 minute-a-month plan? If so, you could cut that bill by $30 or more each month. Could you replace a professional lawn care company with a neighborhood teen willing to cut grass for half the price? Do you need 7 movie channels – or 300 cable channels? Some things – like changing light bulbs – carry very small savings while others add up quickly to high energy use. Do you frequently run the clothes dryer for only 2-3 items? If you crank up the A/C to cool your entire home consider an inexpensive window unit to cool your bedroom at night or to keep your office space comfortable if you work at home. Use air-moving fans to make your home feel cooler than it is by provide air movement.
Don’t wait for a financial crunch to become a personal financial crisis you can’t manage. By cutting back now and putting the priority on making your monthly payments on time rather than getting more “stuff” you can survive the economic downturn. If cutting back makes you feel “deprived”, remember it’s only for the short term. When you are drowning in debt, get your head above water and take charge of your financial life.
Go to http://solvingcreditproblems.com for the facts on managing personal debt, bankruptcy and avoiding foreclosure. Get help with your own financial crisis at Credit Problems
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