Managing personal debt problems

Last week I received a text from a reader asking me for some advice pertaining to her mounting personal debt problems. Although I know that I was able to give her some clarity and direction, but I believe she needs more guidance and coaching to be able to balance everything. It’s just unfortunate that this stuff are not discussed in our school and even at home. I know that at present there are circumstances that are really making our finances tight and more often than not, this puts us in big trouble.

Couple of months ago, I was interviewed by Mr. Bobit Avila in his program “Straight from the Sky with Bobit Avila” there I was able to inform his viewers that balancing ones debts or finances for that matter is not as hard as everybody thought it to be, but obviously not that easy either. The biggest factor in this “balancing act” is that one must fully understand the difference between needs and wants. Needs are mostly associated with what is necessary and so must be prioritized, while wants are those that are nice to have but could be less important and can be deferred or postponed.

Although, I personally believe that it is easier said than done, below are some valuable tips on how to stay “out-of debt” or just simply “manage our personal debt problems.”

First, understand why your credit risk score is important. Aim for “maintaining good credit rating”.

Second, everything begins from small things. Start with paying bills on time. If possible, get into the habit of making payments as soon as the bill comes in. Don't wait for the due date.

Third, sit down with the family and write financial goals together. That way, everybody, including the kids/ siblings, gets on board. It's discouraging if one person is resolved to pay down debt while everybody else constantly clamors to dine out, watch movies or buy toys.

Fourth, focus on paying high interest accounts. Your high-interest accounts go down slower.

Fifth, stop using the cash-advance feature of your credit card. The interest rate is always higher, and you wind up paying a lot more interest and taking longer to repay your debt.

Sixth, stop thinking of your credit card as a cash cow. It's not. It's a loan; you're borrowing money.

Seventh, always remember that, if you mess up with one creditor, you mess up with all.

Eight, call your creditor if you're in over your head. "If there is no way to make even the minimum payments to your creditors after reducing expenses, call your creditors and work out long-term repayment plans with them.

Ninth, get a reputable debt-management firm to plan your repayment/ payment of your bills for you. "For many consumers, that's the only alternative, because they don't have the personal financial discipline or savvy or knowledge to do it on their own.

Tenth, and most importantly, stop giving away your money. Pay cash whenever possible so you don't waste money paying interest. If you can't pay cash, shop with your lowest interest-rate card. Pay off outstanding balances to avoid finance charges, penalty and interests.

Remember, it pays to pay your self first. The key is to stay out of debt and maintain a debt-free living.

For credit & collection questions and inquiries, contact 0917-7220521 or email him at [email protected]