Out of Debt, Out of Mind
So it’s official. The U.S. government’s big $700 billion financial bailout plan – the largest in history – is underway (though, so far, it hasn’t had much effect). It’s Uncle Sam to the rescue…hopefully. But what about the damage that’s already been done to the public, to us little guys? I’m talking psychological, not just financial. I think most of us American citizens are still pretty rattled by the financial meltdown we watched unfold last month.
If daily doom-and-gloom news reports about the latest national bank to shut its doors have got you on edge (I know I had a minor panic attack when I discovered my own bank – Wachovia – would be sold) you’re not alone, believe me. In the past few weeks, DebtStoppers has received hundreds of calls from people wondering what they need to do to make it through this scary mess.
So what exactly can you do? Maybe the best course of action you can take right now is to look inward. Focus on yourself instead of the big picture. Look at it this way – what happens on Wall Street is out of your control, but you can achieve some peace of mind knowing you have command of your own family’s personal finances. And that starts with getting out of debt as fast as possible. With credit card companies raising rates higher than ever, there’s no better time than the present to make a financial plan and resolve to stick with it.
Paying off a large debt can seem daunting, but it really is doable – especially if you take it step-by-step. This probably sounds obvious, but before you can get out of debt, you first have to stop incurring it. Maybe this means only using credit cards when you know you can pay off the balance in full each month. Personally, I’ve taken it a step further and cut up all but two of my cards (which I try to reserve for emergency use only).
Another strategy you might want to consider is using a debit card. As with cash, you’ll be paying directly out of your account instead of racking up credit. But with debit, your bank will provide you with a record of your expenditures each month. Tracking purchases this way makes it a lot easier to keep tabs on how much you’re spending. If there is any upside to these tough times, it’s that it is easier than ever to get into the habit of cutting back on purchases. I know I’ve been giving in to temptation a lot less lately (when a growing portion of your paycheck is going to gas and groceries – and you’re not sure how long those paychecks are going to keep coming – all of a sudden dropping a chunk of change on new shoes or dinner out seems surprisingly less appealing).
Next you’ll need a plan to tackle that remaining debt. Start by getting a copy of your credit report and analyzing your current situation. Take an honest look at your current credit card balances, loans, medical bills and anywhere else you carry debt. From there, you can prioritize. Which of your credit lines has the highest interest rate? It might be good to pay that one off first. Consider all your options. For example, should you switch all your debts to the card with the lowest rate?
Find it all a bit overwhelming? If you need help along the way, DebtStoppers offers a free one-on-one debt analysis to help you figure out where you stand. Contact us to find out about your options.
Just think of the benefits of lifting your debt burden. No more living paycheck to paycheck or stressing about whether you can make your bill payments this month. No more feeling completely helpless when you see the latest financial wreck on TV. And not only will stabilizing your financial situation now help you weather today’s economic storm, but it will ensure that when the economy does eventually pick up, you’ll be way ahead of the game.