Credit Debt – What to do first?
Question: Hi – we are and have been totally slammed with debt. Our main problem is that we are horrible at paying bills on time. We pay them but often late – which acrues late fees and compounded interest. We do not want to claim chp 11 but what should we do? I am at a loss and we are pretty much paralized to seem to do anything. Anyone have any experience to share? Any help would be awesome.
Answer: No, your main problem is that you spend too much compared to your income. Paying late is a sympthom of too little cash flow and a lack of personal responsibility fostered by weak ethics. It also leads to a bad credit rating which makes all your other debts have higher interest rates, and pushes you into higher risk insurance in some cases. Bankruptcy will not help your core problem. You spend too much. Wiping out your debt is only a short term thing since you will simply spend yourself back out of control again if you don’t change your way of life. Go on a money diet. Sell everything that isn’t nailed down. Don’t spend a penny unless your life is in danger. Get rid of any luxury cars and buy used cars that fit your income level. Sell the house and rent if your house payments are out of your income class. Once you get spending under control, focus on paying down debt. Don’t take on any new debt, at all, ever. Then work on improving yourself. When you improve yourself, you will find that you qualify for jobs that pay more.
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