Past Due Again? It’s Time To Deal With Your Debts

You know your debts won’t just go away and that you have to do something about them.  Not answering the phone, not opening the mail, not thinking about the problem isn’t working.  The phone keeps ringing, the past due notices keep piling up, and even when you don’t think you are worrying about your debts, they are still there, stressing you out and making you miserable.  You need a plan.

deal-with-debts

Asses Your Debts In 5 Easy Steps:

  1. Make a list of who you owe.  You can start by sorting through the mail – just make a pile of all the bill notices.  Then have a look on-line at your banking site.  Most will show you your bank balance (or overdraft balance), plus credit card and loan information.
  2. Double check your list. Did you include your mortgage if you have one?  Your car lease or loan?  You need as complete a list as you can come up with.  If you owe grandma $500 make sure she is on the list too.
  3. Do you know what it costs you to live? How much is your rent or mortgage? Utilities? Gas for the car?  Insurance? Time to make a second list of all the things you have to pay for each month, in order to live.
  4. How much money comes in every month? Write down your take home pay, your pensions, government money, baby bonus, all of it.  This step isn’t quite as hard because the list is usually a lot shorter than the lists in steps 3 and 5.
  5. Here’s the tricky part – compare the total income from step 4 to the total costs to live in step 3. The difference, if it is above zero, is how much money you have to deal with your debts.  If the difference is a negative number then you don’t have enough income to live, let alone deal with your debts.

What was the point of all of this?  A simple step by step approach that gets you to look at your financial situation.  This exercise also got you to consider the most important number of all – the amount of money left over to deal with your debts, after you cover all of your living costs.

For whatever reason, many people find dealing with money intimidating.  Once they start to fall behind, instead of attacking the problem, they ignore it.  The problem gets bigger and they ignore it even more.  Then one day a legal letter shows up, their wages are being garnisheed, and their bank account has been frozen.  A bad situation has just become a lot worse.

If you have accumulated more debt than you can deal with, you need to do something to correct the problem.  If you’re past due again, don’t just ignore it, take it as a sign that it’s time to deal with your debts.

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