The world has gone haywire with banks and other companies constantly chasing people offering loans, credit cards, and credit. It is easy to fall prey to temptation and soon you will be juggling money from a to b to c. Despair from unpaid bills can lead to suicide and more. Financial crises can be overwhelming and shaming.
What you need to do is get financial planning. And make up your mind to:
o "Say" NO "to what seem to be exciting offers.
o Stop spending in advance of your earning.
o Do not apply or avail of loans or EMI payment plans.
Take serious stock of your financial condition and sit down with your life partner to do a realistic budgeting, take credit counseling, consider applying for bankruptcy or opting for debt consolidation. The action plan would depend on the level of debt, level of discipline, and your perception capacity.
o Size up practically the soup you are in. Write down what your family income is, the expenditure each month, amount of fixed payment to be made each month like mortgages, car loans, education loan, and insurance premiums. Budget carefully for household and daily needs. See if your meeting meets expenses.
o Read all about money management techniques. Look at free counseling programs.
o When facing problems contact the creditors and explain that you will not default but are working out solutions.
o Study your credit report and cancel all except the oldest and most useful car.
There are facilities like CareOne Debt Counseling which adhere to AICCCA standards.
They are available online.
Avoid Credit Card Debt by:
o Paying in cash. In the long run you will pay almost 50% more for goods if you do not pay credit card bills in full.
o Transfer credit balance to a card with lower interest rate.
o Consolidate debt. Think about a home equity loan or unsecured consolidation loan.
o Desist from cash advance.
o Do not buy what you do not need.
o Lock up your credit cards so that you can not use them when you are out shopping or strolling down a street.
o Check your statement regularly to catch any errors.
Know your rights. While credit card companies are sweet and helpful while issuing cards they can turn nasty when playing the role of debt collector. The "Fair Debt Collection Practices Act" states:
o A debt collector can not chase a debtor between 8 am and 9 pm.
o They must not call at work.
o They can not use strong arm tactics on you.
o If you submit a written request "to stop harassment" they must oblige.
Sometimes a creditor will offer to settle your debt. This will hurt or credit score, but if you are already behind in payments your credit score is already damaged.
Money and a consumer society are both hard to understand and handle. It is important to be disciplined and known how to prepare and stick to a budget. Money handled wisely will last otherwise you will have to face the dilemma of what to do and how to get out of drowning in debt.