You may feel like you are in a financial hole so deep that you will never get out. Bankruptcy might look like the only way to solve your problems and get a fresh start. It’s not that easy, though. New laws that just came into effect have made it much harder for you to get a discharge of your personal debts through bankruptcy. That doesn’t mean that your situation is hopeless. The first thing you should do is work to get your debts under control. Here are three techniques which will help you do just that.
1. Find out what you are facing. Quite often the problem seems bigger than it really is. Gather together every debt that you have, write down what you owe and who you owe it to. Once you take a look at the problem on paper you might feel better about it. At the very least you will have a definite target to work towards instead of an uncertain enemy called debt. Once you have your debts listed, you can begin to make a plan. Look at the expenses that you can’t avoid – rent, car, etc. – and plan to pay them. Next, look at the interest rates of the other debts and determine the best order to tackle them. Once you have a plan and decide to stick to it you are on your way to a solution to your financial problems.
2. Cash or nothing. At the beginning of the month take a specific amount of money from your cheques in cash. This is your disposable income for the month. When it is gone you are done for the rest of the month. Essentially, you are giving yourself an allowance. It will be a shock at first, but after a while you will get used to this strict type of budgeting and you may even like it. It is empowering to use this method, because it allows you to set aside the money you need to deal with debt payment so you can pay off your debts more quickly.
3. Get your family involved. You may have got yourself to this point alone, but you don’t have to get out of it alone. Get your family involved. Be honest with them and let them know that you can solve the problem faster if you work together. If you turn saving into a game for kids, they will actually enjoy it. Have them look through the papers for coupons. Make it a game to see how much money your family can save in a month. Think of a fun but inexpensive prize you can give yourselves is you save more one month than you did the month before.
4. Say goodbye to ‘stuff’. Our houses are full of stuff that we are sure we needed at the time, but that lives in our closets now. We never use it and we don’t need it, but someone might. Use eBay or have a garage sale to get rid of the stuff that you can live without. You will feel better living in an uncluttered home and you will be surprised how much money you can raise doing this.
5. Go for credit counseling. Credit counselors are available almost everywhere. You can find on by contacting the National Foundation for Credit Counseling and asking them where the closest affiliate is located. A credit counselor can help you set up a budget and can put you on a debt management plan which will work for you and help you solve your problems. Credit counselors are experts and they will know best what to do in your situation. The one thing to remember is that, because they are professionals, they have seen lots of people with lots of problems and they have certainly seen people with problems much bigger and more serious than yours.
6. Get a second job. A few dollars an hour might not seem like much, but when you add up a few dollars an hour for several hours a week for a month, suddenly you have an amount of money that can really make a difference. A few hundred extra dollars in a month can help you pay off bills faster and help you get ahead that much quicker. It doesn’t even have to be a fancy job. Something as simple as flipping burgers can give you the money you need and provide the flexibility to allow you to fit the new job in with your other responsibilities. You don’t have to worry about being embarrassed about what you had to do – you don’t have to put it on your resume.
These are six simple but very effective steps you can take before you need to consider bankruptcy.