No Money, Now What? Part 4

14 Jan No Money, Now What? Part 4

You have no money – or so you think. You’ve looked at your goals and figured out your net worth. When the budget is calculated and values are determined, you see that you do have something to lose. Well, don’t just sit there – do something!

The conclusion most people reach at this point is to figure out a way to pay everybody. This is where mistakes can be made. Retirement funds get liquidated (creating a tax problem) or credit counselors get hired, sometimes at great expense. Before you spend any money or sell any property formulate a plan first. You may find that you don’t need must help.

Step One – go on a debt diet. When calculating your budget, also figure what you need to avoid borrowing any money for the foreseeable future. The sooner you go on a cash budget, the better your chances at payment of your outstanding credit. Your calculations will reveal what you can realistically devote to paying off those credit cards.

Step Two – plan. There are several ways you can approach paying creditors. Some suggest starting a “debt snowball” by paying off the smallest bills first and graduate to the largest ones as time goes on. Others suggest going for the quick hit by making settlement deals, paying lump sum amounts to settle debts for less than you owe. Yet others suggest negotiating a regular monthly payment plan slowly, but surely paying those balances off.

Step Three – execute that plan. You don’t need “experts” in credit counseling to do this. There is no magic wand, only hard work. If you have dependable regular income that exceeds your needs, then pay that debt off. Be sure that you are not being overly optimistic about your ability. There are other alternatives that include debt repayment with the protection of a Court of law.

“ConnecticutGene Melchionne is a bankruptcy lawyer covering the entire State of Connecticut. He can often be found on Google+ and Twitter, where he shares information about consumer protection issues and personal finance.

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