Debt relief programs seem to be springing up all over the map. And why not? Consumer debt is crushing the budgets of millions of households. Hopes of retirement are being replaced by fear of losing a home. More and more people are lowering their own expectations.
This is leading folks to want to punish the successful because they have abandoned any hope of success for themselves.
Debt consolidation is a big option. Credit card debt relief is one of the most sought after plans. Credit card bills are the personal version of the massive amount owed by the US government. But we don't get to print fiat currency like the federal reserve does everyday.
Bankruptcy is another choice to eliminate the past due bills. My thinking has changed over the years on which option is better. For sure the best option is neither of these two. But if you feel trapped with no recourse, I think bankruptcy might be a better path as opposed to one of the debt consolidation companies.
The day after a Chapter 7 bankruptcy is discharged you can begin to rebuild your credit. Under a typical debt consolidation program, your credit could linger in the depths for a longer period.
But lets focus on a better debt relief program. Better than any consolidation company or bankruptcy.
The best one I've found is also the simplest. Not easy, but for sure simple. Step by step. Focused. One part builds on another. Just like any great blueprint.
Where is this great plan? Of course in an empowering book! "The Total Money Makeover" by Dave Ramsey is the best debt relief program and even better, a road map to prosperity. It works for everyone who follows it to the letter.
Not all of it will be fun for you. In fact much of the plan is very hard. Not as hard as crushing debt however.
I'll give you the first three steps in that book. These steps follow some excellent information on the many myths that get people in financial trouble. Since most of our schools do not teach financial literacy, graduates are not close to being prepared for the real world.
We have a growing student loan default epidemic choking college students and graduates. This book will help fix the knowledge gap enabling that problem as well. Better mindset and basic knowledge can reverse past mistakes and prevent future bad choices.
* Accumulate $1000 for an emergency fund. This is more important than just a source of liquid cash. It is also one of those mental benchmarks. In most cases it will require a mindset change and a habit reversal. Dave Ramsey says to accomplish this task as quickly as possible. More on this below.
The key is to get to that $1000 level. The author uses an example that truly fits into our dual sub-theme web site. He cites the case of a person dedicating himself to an exercise regimen. In the first week, this person suffers a twisted ankle and gives up on the entire exercise plan.
That is the value of getting this emergency fund completed before beginning to wipe out debt. When something breaks or a true emergency comes up, you have the cash to pay for it without using any new debt. Losing faith in the process effects health changes and a debt relief program.
* List all your debts. This means every one. Even the ones "off the books", such as debt to parents, (or to kids.) List them in order of lowest amount to highest. I know. You've heard television "experts" talk about paying off the highest interest rate first. Again, the key is more mental than physical.
Knocking off that list will empower your mind and inspire your actions. You will pay the minimum payment on all those listed debts. Any other money you can scrape up goes to pay off that lowest debt. You may be able to knock that one off right away. If it is $25.00, pay it off and draw a big line through it.
Then add that $25.00 plus anything else you can put together and dump it on that next lowest payment. The key is to stay current on everything else while attacking that smallest amount due. As you knock off the next one, the pattern continues.
Keep adding that entire amount you used last month on the two paid debts. Except now it goes on to the third lowest. And the snowball effect has begun. The self confidence snowball will also grow.
So what happens if you have a real emergency and have to dip into that $1000 fund? You go back to step one and re-establish the emergency fund. Then resume the debt snowball.
* Finish off the emergency fund. After you've cut out all the debt except your home mortgage, build up three to six months of cash in your existing emergency fund. This will be to cover something very major, such as a job loss.
There are more advanced steps following these first "Baby Steps". But these first three will get you rolling and create a more bullet proof attitude.
You may be asking, how will this work if I'm just getting by now with everyday bills, let alone paying off any extra each month? You may not like this answer, but it is the truth. You may have to get a second job. They are available all over the place. I can speak from a personal standpoint on this one. I took a second job to clean up some bills. It took me two years to get them cleared away, but they are long gone now.
My second job was handling a rural newspaper delivery route. It was everyday of the week. Everyday of the year. Pick up the papers at 1:00 AM and drive throughout the route placing them in tubes near the driveways. In the frigid winters, slogging through snow drifts. On July 4th, Christmas and Thanksgiving. Everyday.
But the opportunity was there to correct some mistakes from the past. There are two choices. Complain and feel sorry for ourselves and hope for a government handout. Or get busy and fix it.
I got myself into the mess. It was my responsibility to get myself out. While I was thrilled to drop off that last paper after those two years, I was also pretty satisfied with fixing the problem. In addition, I gained a far greater respect for those people who go out there every night to deliver that newspaper. And pay their own way without expecting any "entitled" check from the state.
Commit to doing exactly what Dave Ramsey suggests in this book. "The Total Money Makeover" will get your financial house in order. He will help you develop an organized approach to using the actual money you have available right now to begin to move out of the hole.
He includes worksheets and charts to help you visualize your progress. Even more important he will help you change your thinking. That will be a big boost. Believing in your self and knowing you can have a better life is critical.
You can get out from under the weight of bills. You can have and do deserve a better life. Then you can help us build a snowball effect to aid the many less fortunate than ourselves. The government is a proven failure in helping the poor. It is up to us. But as we hear on any airplane in any country prior to take off. " In the unlikely event of loss of cabin pressure, put on your oxygen mask first. Then help the person next to you."
The finest debt relief program is at your fingertips with this excellent book. For sure an empowering edition.