Pain before progress

Watching the news lately, I feel torn. While on the one hand I’m truly saddened by the shocking number of the layoffs and business closings, I also see hope in the meltdown.

Take the story of Starbucks, for instance. The company just announced they will be closing 300 stores and cutting 6,000 jobs. I certainly feel for any worker who is laid off. But I realize this also means we’re making a lot of progress. Americans are saying no to our coffee habits so we can spend money on more important things, like paying the mortgage, paying down debt and increasing our savings. We’re choosing not to put $20 on the credit card every week if we don’t need to. And that’s significant.

In a perfect world, there would be no sacrifice involved. Government would spend our tax money on helping us, and banks and automakers would figure out how to survive on their own. But that’s not reality. And though the economic crisis will help a lot of us emerge stronger and smarter in the long run, people will get hurt along the way. Fortunately, Uncle Sam is starting to do more to minimize the hurt. Yesterday, Congress OK’d the economic stimulus bill that, for the first time since this crisis began, will actually help Main Street.

But keep in mind that $825 billion might look like a lot on paper, but it really isn’t that much in action. We can’t expect the stimulus package to save every house or job—or even the majority of them. So we need to take action ourselves.

If you’re scrimping and cutting coupons and you still don’t have enough to pay off the debts that are eating up your paychecks, don’t wait until Uncle Sam’s handout trickles down to your neighborhood. Who knows how long that’ll take? Start looking at your finances now. Find ways to scale back and reprioritize. Don’t be afraid to ask for help. When you sign up for our free one-on-one debt analysis, we’ll take a look at your specific situation and draft a personalized plan for you to get back on track.

If you’re one of the millions of Americans who faces foreclosure because of debt, you’ll need to act even faster. The only sure way to stop the foreclosure process is Chapter 13 bankruptcy. Fortunately, Congress is poised to pass a new bankruptcy bill that will make the process even more beneficial. Is your mortgage too high? Has depreciation caused your home’s value to sink far below your mortgage? You’re in luck—when the bill passes, a judge will be allowed to adjust your mortgage, potentially reducing your total payment to the current value of your home. On top of that, bankruptcy will still allow you to lower your other, non-mortgage debt payments. So you can spend far less on paying the creditors and more on the stuff you need right now—like groceries, gas, and health insurance—and the stuff you need for the future—like savings and investments.

Interested? Order our Financial Toolkit for the latest information on Chapter 13, as well as other pertinent financial advice. To find out if bankruptcy is right for you, sign up for our free debt evaluation.

I don’t mean to sugarcoat the painful realities of the recession—but as they say, no pain, no gain. Thinks of the recession as a dark tunnel. We're all passing through it, but what lies at the end will vary depending on our actions today. Take this time to make sure it’s sunny when you come out on the other side.

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