Reducing Debt and Payments
Trust me when I say, I've been in position to have used all of the following suggestions and headaches.
You have debt. You don't make enough money. You'd pay if you could. You just don't have it to pay. How do you deal with it all? It's so stressful.
If you have a regular job where you can pay SOME, but not all on your bills, you will go about it differently than if you don't have a regular job.
Budget. Look realistically at your bills. You need to pay for food, gas, electricity, phone and insurance; rent or mortgage, car payment, clothes (most people forget this); medicine. If your money will go this far, then you can start looking at managing your credit card debt.
Food - Stretching Food Budgets
Gas - combine trips to save both gas and time. Even if all you are saving is the gas to pull in and out of your driveway, you're saving money.
Make sure your tires are at the right pressure. It sounds wild, but it's true that correct tire pressure can save up to 10% of your gas consumption.
Tune up - make sure air filter is clean. If the car is running rough, put fuel injector cleaner in to help optimize your engine's ability. Use AC as little as possible.
Speed Limit - going no faster than 65 mph will give you ultimate mileage. Start up slow from stop signs or red lights - it takes less gas.
Don't idle. Don't leave the cars running for more than 1 minute without shutting it off.
Electricity - Keep lights, TV's, radios, computers, monitors, printers, etc. OFF when not in use.
Unplug all appliances that don't need to run constantly when you aren't using them. These 2 things alone can save you 10%.
Turning your heat down 1 degree can save 2% on the heat portion of your bill. Turning your AC up 1 degree can do the same thing. Use insulated curtains to hold indoor temperature steady.
Phone - use a calling card for long distance. Most have charges of 3.4 cents per minute now - very cheap! Don't get the all in one packages that are being sold by cable companies. Unless everyone you talk to on a daily basis lives out of town, you're wasting money.
Consider getting rid of landline if you have a cell. Don't pay for both, especially if you don't talk on the phone a lot.
Cable - get rid of it. Read books or put the money toward internet access. You get the same information online for less. DSL through the phone lines is cheaper than cable internet.
Insurance - You have to have car insurance. Talk to your agent and ask them what you can get rid of. Check around for cheaper rates, but really look. Sometimes the savings is less than 2% and can go up for a simple traffic violation. Be cautious when changing carriers.
Health Insurance - If you don't have any, start a small account and put some in it every month. Mine is in my sock drawer - not that I advocate that AT all. But, I have my reasons. And, it keeps me honest and keeps me putting the money in.
Rent - there is very little you can do to change this number. Don't even try. If you have a mortgage - you can try renegotiating the terms. It's similar to refinancing, but isn't.
Car Payment - you can do the same as with the mortgage. If you're tight on cash, you can ask for a renegotiation. You'll pay longer, but if you ever get to a better spot financially, you can pay more down per month to finish the debt sooner.
Clothes - you need clothes. Budget so you can buy at least one article of clothing per month, then shop the sales as often as possible. Don't buy anything at regular price. There's no need, especially with all of the discount stores out there now.
Medicine - You need even aspirin on occasion, no matter how healthy you are. Put a reasonable amount in per month for over the counter meds, and again, buy on sale and buy generic. If you have prescription meds, please refer to this link for more assistance:
Again, if you money covers all of these things and you still have some left over, then start looking at your credit card debt.
Credit Cards - If you can pay some on all of your cards, then call the companies to negotiate a decent interest rate. Most will probably deactivate the account if you can't pay their minimum payment, but it won't look as bad on your credit report than defaulting on one or more.
Most advisors urge people to pay the highest interest rate off first. I suggest you pay the lowest balance off first, then go to the highest interest rate. You need cash flow now. As cash frees up, increase your payments on all by even as little as $5 a month, while putting the lion's share toward the highest interest rate. This shows good faith to all of the companies while reducing your balance on all and mostly on the worst one.
Close all but 2 or 3 of the accounts. Remember the average American has 7.
If you can't pay on all of them, then choose 1 for emergencies only, pay the debt off this one and stop using or paying all others.
Being in the crisis mode like this makes life far different than it once was. You will most likely be unable to keep your credit record clean, so don't try.
Call the credit card company you will be keeping the account open with and negotiate an interest rate reduction with a promise of paying X amount per month to pay the debt off.
After being in default on the other cards for at least 30 days, call the companies to ask for their hardship program. Negotiate a payment you can handle and they will most likely give you a reduced interest rate. The account will be deactivated so you can't use it until you are back in good standing with the company.
Become a "Cash Only" person. If you don't carry your credit cards, you will be less likely to use them. You buy only what you have cash for. And if that's only food, then that's the way life is right now. You need to get your debt under control or at least out of crisis. It can and will bury you if you don't take the steps necessary to regain control of your life. Keep the one credit card for emergencies only - such as ER visits, the car breaking down, a new necessary medication. There are very few reasons to use the credit card - so don't use it!
This takes discipline, focus, determination and patience. It won't come easy or fast, but it will come.