How to get out of debt trouble (Part 2)

My article last week elicited several inquiries and follow-up questions from readers who are wanting to know more about handling their debt problems. Most of them are asking practical way or steps to be taken in getting out of debt trouble.

Personally, I always believe that the process of avoiding debt trouble is not as difficult as one may think. However, if one wants to be truly out of debt trouble for this year 2013, he or she needs a firm resolve and a lot of discipline. Being out of debt trouble is a matter of decision. This decision requires a lot of sacrifices and self-discipline for one to reach this goal.

Below are some practical and simple actionable steps if you want to be truly out of debt trouble:

First, have a family meeting. Sit down with the family members and discuss with them the current financial situation or predicament. The more honest and open you are in explaining what’s going on, the better they can understand the picture. In this way, everybody, including the kids and other family members, such as siblings or in-laws can get on board. Needless to say, it is very discouraging and even frustrating if one person is resolved to pay down debt while everybody else constantly clamors to do otherwise such as dining out, buying new stuff (shoes, cellphone), buy toys or watch the latest movies.

Second, start paying cash. On every possible transaction, such as buying grocery, paying utilities and other stuff, start paying it cash. Stop using your credit card especially if you are already in the point of just paying the monthly minimum fee.  But most importantly do not use the cash-advance feature of your credit card as the monthly interest rate is always higher, and you wound up paying a lot more interest and will be taking longer to repay your debt if you will use the cash advance feature of your credit card. It is important that you and your family realize that a credit card is not a “piggy bank” or a “cash cow”. It's not! Any charges that you make is considered a loan, wherever and whichever way you look at it, it is as if you are borrowing money and you will definitely be paying it more with interest.

Third, if you cannot handle the problem by yourself, reach out. Don’t be afraid to ask for support system such as your friend whom you know who has a stronger will power or who is responsible in her/ his own money matters. Your friend can act as your “Credit Counselor” and can be able to counsel you on money matters. It is better if the person you will be asking guidance from is already matured and has a track record of self-discipline and accountability. He or she can be asked to strictly guide you to follow your repayment plan. For many debtors, this is one of the more effective ways of overcoming their “bad habit” of overspending outside of written budget. Likewise, these Credit Counselors may be also capable of calling your creditor if you are already over your head, meaning there is already no way for you to make even the minimum payments to your creditors after reducing expenses.

Overall, always remember that everything begins from small things. If possible, start with paying your bills on time. Get into the habit of making payments as soon as the bill comes and don't wait for the due date, this will have a positive impact in your effort. Remember, being out of debt trouble is not necessary having lots of money but having a solid plan and self-discipline.

For comments, rejoinders and questions on credit and collection matters, send email to [email protected].