Stop charging and start taking charge
- Monday, September 27, 1999
If you use credit cards without paying the balance monthly, owe money on a loan, or are paying off a home mortgage, you're a debtor. Most Americans are in debt; if you're not, some might think you're downright unpatriotic.
Many economists believe that indebtedness keeps our country financially on the move. When was the last time you saw a bank ad encouraging you to save? The theme of our consumer-driven economy is borrow and spend. It's not popular to suggest becoming debt free. However, freedom from debt speaks for itself; in a word, it is freedom.
Although not a popular theme, and despite the fact that some think they're in debt so deep they can't ever get out, becoming debt free is a worthy, realistic, and attainable goal. Getting rid of your debt isn't always easy. However, the process is actually very simple.
- Allow no more debt - duh! That means no bank or family loans, and tear up the credit cards.
- Develop a balanced budget that allows each creditor to receive as much as possible.
- Start retiring the debt now.
- Begin with high interest debts first. If they're all high-interest, pay the smallest balance first.
- Once it's paid off, put all the available money on the next, and so on. Most families can be debt free in three or four years.
- Told you it was simple. However, it's not easy. It requires real determination and consistency.
Create a detailed repayment schedule that shows exactly how much you are able to pay them each month. Sometimes an objective third party might be necessary to require compliance with the agreements. There are consumer credit counseling organizations around the country that can help you do this.
If debt collectors are hounding you, you can do something about it. The Fair Debt Collection Practices Act, passed by Congress in 1977, prohibits certain methods of debt collection. Also, you could report your problem to your state attorney general's office. Many states have their own debt collection laws, and the attorney general can help define your rights.
In my book, Debt-Free Living, I give suggestions for dealing with creditors and the appendix contains a chapter on the Fair Debt Collection Act. Personal, family, and household debts are covered under the Act. This includes money owed for such things as cars, medical care, or charge accounts. However, don't forget that this law does not erase legitimate debts you owe.
Remember that nothing positive will happen with your financial problems until you start taking charge of your debts.
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