Are you drowning in debt? Do you feel that you have no option but to use your retirement savings to pay off your credit cards? Maybe one of the financial institutions are pressurizing you with phone calls and you want rid of them. There are many other people in a similar situation but often you can feel very alone. This can make you vulnerable to the suggestions of some less than ethical bill collection agencies.
Before you touch your
401k to pay off credit cards, you need to prepare a budget. Take a piece of paper or excel if you like working on spreadsheets and make a list of all of your income and outgoings. You need to prioritize your outgoings into things that have to be paid i.e. food, housing, taxes, gas for getting to work, utility bills etc and then a list of everything else.
Hopefully when you prepare your budget you will have some money left over every month to start paying down your debt. If you don't, you may be able to find ways of cutting your expenses. Think about all the little things you currently spend cash on. You might buy lattes on your way to work or lunch at the shop rather than bringing in a sandwich. It may seem like a couple of dollars here and there but it all adds up. If you can free up some cash by cutting back on your spending or working extra hours or a second or third job, you can take control over your debt and your life.
Can you raise any extra money by selling some of your stuff on EBay or similar auction sites? You would be surprised at what other people will buy and it could just give you a small lump sum to keep the wolves from the door. Yes it is only buying time but in that time you can get organized.
If you have no extra cash and no way of raising additional money, you should make an appointment with a bankruptcy attorney and get some professional advice on your best options. Be careful to choose a lawyer that you pay upfront rather than one that gets paid if you proceed with the bankruptcy. You want someone completely impartial acting in your best interests. You will not get this by dealing with debt management companies or some credit counselors.
Be Realistic About How Long Getting Out Of Debt Will Take.
If you do have some spare cash, you need to be realistic about how long getting out of debt will take. There are no magic quick fixes and you should avoid any company telling you there is. They are only interested in profiting from your misfortune and will not help your long term finances.
